Gold Price Forecast: XAU/USD holds in positive ground as US dollar stumbles again

Update: The gold price is elevated as the US dollar bleeds out along with US yields. The 10-yer yield is down around 2% on the day so far while the DXY index that measures the greenback vs. a basket of currencies is bleeding some 0.3% at the time of writing. 

The peace talks between Russia and Ukraine have seen Russia promise to scale down military operations around Ukraine's capital and north, while Kyiv proposed Ukraine join the EU while adopting neutral status by not joining NATO. 

''Talks successful enough for a possible meeting between Putin and Zelensky, says Ukrainian presidential advisor Mykhailo Podolyak. “We have documents prepared now which allow the presidents to meet on a bilateral basis," he said.

Overall though, however,  movements have been fairly muted. This is suggesting the Russia-Ukraine war is not as priced in as some may have thought, or markets are not buying it totally. It has been up and down in markets in the last 24 hours. However, most notable was the surge in 2Y UST yields to 2.45% yesterday, and yield curve inversions.

End of update

Gold (XAU/USD) has been hammered by the market participants as safe-haven assets lose appeal on progress in peace talks between Russia and Ukraine. The precious metal witnessed a steep fall this week after failing to sustain above the grounds of $1,950.00. Although a responsive buying slightly below $1,900 has pushed the gold prices near $1,920.00.

The Russian administration is withstanding the initial step of ceasefire with Ukraine and has withdrawn its troops in northern Ukraine and Kyiv. While Ukraine has adopted a neutral status and is abstaining from an alliance with the NATO community.

The initial gesture towards the roadmap of truce by Moscow and Kyiv has improved the market sentiment. Risk-sensitive assets are gaining traction amid active risk-on impulse.

Meanwhile, the US dollar index (DXY) has also faced the heat of sheer selling in the safe-haven assets. The DXY is reversing to Tuesday’s low around 98.00 and is likely to extend its losses amid the violation of the latter. The higher odds of 50 basis points (bps) interest rate hike by the Federal Reserve (Fed) are intact amid modest US JOLTS Job Openings data. The JOLTS Job Opening was recorded at 11.266M, a tad higher than the previous figure of 11.263M and the estimate of 11M.

For further direction, investors will focus on the quarterly US Gross Domestic Product annualized (Q4), which is due on Wednesday. A preliminary estimate for quarterly US GDP is 7%, synonymous with the previous figure.

Gold Technical Analysis

On the hourly scale, XAU/USD has sensed responsive buying after the re-test near March 16 low at $1,895.15. The precious metal has overstepped the 20-period Exponential Moving Average (EMA). The Relative Strength Index (RSI) (14) has shifted into a 40.00-60.00 range, which signals a consolidation ahead.

Gold hourly chart