Gold Price Forecast: Down but not out amid geopolitical tensions, ahead of Fed minutes
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UPGRADE- Gold price nurses losses after Tuesday’s sharp U-turn from three-month highs.
- Markets remain cautious as Biden’s comments offset Russia-Ukraine de-escalation prospects.
- Gold bulls remain hopeful while above 38.2% Fibo support ahead of Fed minutes.
Gold price is treading waters while consolidating Tuesday’s slump, as bears take a breather ahead of the critical January Fed meeting’s minutes and US Retail Sales release. The market sentiment remains cautiously optimistic amid prospects of a potential de-escalation of geopolitical tensions between Russia and Ukraine. However, US President Joe Biden’s comments keep investors reassessing the looming geopolitical risks. Biden said that he remains over the Russian troops' withdrawal from the Ukrainian border, citing that Russia will invade Ukraine because its troops remain in a “threatening position.”
Attention now turns towards the US economic events, with the Retail Sales report likely to play a second fiddle to the persisting geopolitical tensions and the Fed minutes. The FOMC minutes could temper the market’s pricing of an anggressive rate hike this year, as Fed Chair Jerome Powell has remained dovish during his official testimonies. Any dovish surprise will trigger a fresh selling wave in the US dollar, reviving the demand for the bright metal. However, the incoming Russia-Ukraine developments will be also closely followed for any unexpected market reaction.
Gold price rallied hard to three-month highs of $1,880 in the first half of Tuesday, as markets fretted over the Ukrainian situation, with US and NATO leaders urging de-escalation. However, in the European trading, gold price took a 360-degree turn and fell like a pack of cards amid a sudden shift toward the risk-on trades, as the Russian military said that a number of drills have finished and that the troops are expected to return to bases. The bright metal eroded all of its shine and tumbled to $1,845, the lowest levels so far this week. The risk rebound-led rally in the global stocks further weighed negatively on the safe-haven gold.
Gold Price Chart - Technical outlook
Gold: Daily chart
The sell-off in gold price found support just above $1,842, the 38.2% Fibonacci Retracement level (Fibo) of the rally from January 28 to the three-month top of $1,880.
As of writing, bulls are holding the metal well above that support area, looking to recapture the 23.6% Fibo level of the same advance at $1,857.
The next upside barrier is seen at the previous week’s high of $1,866, above which doors will reopen for a fresh upswing towards the multi-month peak.
The 14-day Relative Strength Index (RSI) still holds comfortable above the central line, despite the recent slump in prices, suggesting that the bullish potential remains intact.
If the abovementioned 38.2% Fibo support is breached, then a drop towards the confluence of the bullish 21-Daily Moving Average (DMA) and the 50.0% Fibonacci Retracement level at $1,830 cannot be ruled.
The 61.8% Fibo level at $1,819 will be the level to beat for gold bears.
- Gold price nurses losses after Tuesday’s sharp U-turn from three-month highs.
- Markets remain cautious as Biden’s comments offset Russia-Ukraine de-escalation prospects.
- Gold bulls remain hopeful while above 38.2% Fibo support ahead of Fed minutes.
Gold price is treading waters while consolidating Tuesday’s slump, as bears take a breather ahead of the critical January Fed meeting’s minutes and US Retail Sales release. The market sentiment remains cautiously optimistic amid prospects of a potential de-escalation of geopolitical tensions between Russia and Ukraine. However, US President Joe Biden’s comments keep investors reassessing the looming geopolitical risks. Biden said that he remains over the Russian troops' withdrawal from the Ukrainian border, citing that Russia will invade Ukraine because its troops remain in a “threatening position.”
Attention now turns towards the US economic events, with the Retail Sales report likely to play a second fiddle to the persisting geopolitical tensions and the Fed minutes. The FOMC minutes could temper the market’s pricing of an anggressive rate hike this year, as Fed Chair Jerome Powell has remained dovish during his official testimonies. Any dovish surprise will trigger a fresh selling wave in the US dollar, reviving the demand for the bright metal. However, the incoming Russia-Ukraine developments will be also closely followed for any unexpected market reaction.
Gold price rallied hard to three-month highs of $1,880 in the first half of Tuesday, as markets fretted over the Ukrainian situation, with US and NATO leaders urging de-escalation. However, in the European trading, gold price took a 360-degree turn and fell like a pack of cards amid a sudden shift toward the risk-on trades, as the Russian military said that a number of drills have finished and that the troops are expected to return to bases. The bright metal eroded all of its shine and tumbled to $1,845, the lowest levels so far this week. The risk rebound-led rally in the global stocks further weighed negatively on the safe-haven gold.
Gold Price Chart - Technical outlook
Gold: Daily chart
The sell-off in gold price found support just above $1,842, the 38.2% Fibonacci Retracement level (Fibo) of the rally from January 28 to the three-month top of $1,880.
As of writing, bulls are holding the metal well above that support area, looking to recapture the 23.6% Fibo level of the same advance at $1,857.
The next upside barrier is seen at the previous week’s high of $1,866, above which doors will reopen for a fresh upswing towards the multi-month peak.
The 14-day Relative Strength Index (RSI) still holds comfortable above the central line, despite the recent slump in prices, suggesting that the bullish potential remains intact.
If the abovementioned 38.2% Fibo support is breached, then a drop towards the confluence of the bullish 21-Daily Moving Average (DMA) and the 50.0% Fibonacci Retracement level at $1,830 cannot be ruled.
The 61.8% Fibo level at $1,819 will be the level to beat for gold bears.
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