- Gold Price snapped a three-day downtrend to bounce off a 13-day low.
- Mixed headlines coming from the Russia-Ukraine front weighed on the market's mood.
- XAUUSD is technically bullish, faces strong resistance around $1,960.
XAUUSD advances slowly but steadily as investors continue to dump the greenback. The bright metal is trading near a daily high fo $1,949.78 a troy ounce, still down for the week as it started it at $1,988.44. Beyond the broad dollar’s weakness, Wall Street is also providing support to Gold Price, as the three major indexes trade in the red. Market participants are disappointed by the lack of progress in Russia-Ukraine peace talks, as if the crisis continues, it could have long-lasting effects in growth, while pushing inflation higher.
A hawkish stance from the US Federal Reserve is also taking its toll on equities, as the US central bank has pointed out to possible six more rate hikes this year, pretty much one in each monetary policy meeting, while hinting at the reduction of the balance sheet as soon as next May.
Nevertheless, the focus remains on the Eastern Europe conflict. So far, peace talks have not been enough to prevent Russian attacks on its neighbor country, which continue to escalate. The latest on the matter indicates that Ukraine and Turkey are working on setting up a meeting between Volodymyr Zelenskyy and Vladimir Putin. Additionally, the UK announced is halting all tax cooperation with Russia and Belarus by suspending exchanges of tax information with them.
In the meantime, demand for the greenback remains subdued, amid easing US government bond yields. The yield on the US 10-year Treasury note retreated further and is currently at around 2.14% after peaking at 2.24% following the US Federal Reserve monetary policy announcement on Wednesday.
Also read: Gold Price Forecast: Acceptance above 21-DMA is critical for XAU/USD for additional recovery gains
The talks of a diplomatic compromise between Russia and Ukraine initially triggered the risk-on mood during Wednesday’s North American session before news suggesting a deadlock on the proposed neutrality of Kyiv. Also, Russia was ordered by the International Court of Justice in The Hague to suspend the invasion of Ukraine, which in turn may raise barriers for successful talks. Recently, Ukrainian President Volodymyr Zelenskyy hoped for the allies' assistance on control of air traffic for Russian military planes.
Elsewhere, a softer COVID-19 daily count from China tames virus woes from the dragon nation and adds to the upbeat sentiment. On the same line were headlines suggesting the government’s readiness to propel economic growth, by China Vice Premier Liu He.
It should, however, be noted that the US Federal Reserve’s (Fed) 0.25% rate hike and expectations of seven more such rate lifts during 2022, coupled with upwardly revised inflation forecast, challenge the risk-on mood. Moving on, gold traders will pay major attention to the headlines from China and Ukraine for fresh directions.
XAUUSD Technical Outlook
XAUUSD is up for a second consecutive day, recovering from near the 61.8% retracement of its 2022 rally from $1780.15 to $2070.50. The next Fibonacci resistance level comes at around $1,960, and a break above it should hint at renewed bullish strength.
Gold Price is technically bullish according to technical readings in the daily chart. The 100 and 200 SMAs remain well below the current level with mildly bullish slopes. Technical indicators are recovering after nearing their midlines, gaining bullish momentum, without signs of exhaustion.
The 4-hour chart shows that Gold Price holds onto the previous day’s rebound from the 200-SMA, although below the 100 SMA currently at around $1,950.
In a case where gold rises past $1,960, a three-week-old horizontal area surrounding $1,970-75 will act as the last defense for bulls. On the contrary, the previous resistance line from March 08 and the 200-SMA, around $1,912 and $1,895 in that order, will challenge the short-term downside of gold.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD sits at yearly lows near 1.0550 ahead of EU GDP, US PPI data
EUR/USD is trading near 1.0550 in the European session on Thursday, sitting at the lowest level in a year. The Trump trades-driven relentless US Dollar buying and German political instability weigh on the pair. Traders await EU GDP data and US PPI report ahead of Fed Chair Powell's speech.
GBP/USD holds losses below 1.2700 on sustained US Dollar strength
GBP/USD is holding losses near multi-month lows below 1.2700 in European trading on Thursday. The pair remains vulnerable amid a broadly firmer US Dollar and softer risk tone even as BoE policymakers stick to a cautious stance on policy. Speeches from Powell and Bailey are eyed.
Gold price hits fresh two-month low as the post-election USD rally remains uninterrupted
Gold price drifts lower for the fifth consecutive day and drops to its lowest level since September 19, around the $2,554-2,553 region heading into the European session on Thursday. The commodity continues to be weighed down by an extension of the US Dollar's post-election rally to a fresh year-to-date.
XRP struggles near $0.7440, could still sustain rally after Robinhood listing
Ripple's XRP is trading near $0.6900, down nearly 3% on Wednesday, as declining open interest could extend its price correction. However, other on-chain metrics point to a long-term bullish setup.
Trump vs CPI
US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.