Gold Price Forecast: Bulls tiring in late NY trade, but old resistance near $1,927 turns support
|- US ISM Manufacturing PMI for February is still in expansionary territory and came better than expected.
- US ISM New Orders reached a five-month high.
- Despite positive economic data in the US, market sentiment remains the main driver for XAU/USD.
- XAU/USD Technical Outlook: Neutral upward biased and dependant on investors’ mood.
Update: Gold is starting to back away from the highs of the day near $1,942 as the risk-off scramble dies down late in the New York session. XAU/USD has rallied from a low of $1,901.47, an area of support and in a move that was forecasted in the prior analysis from the New York session on Monday as follows:
Gold prior technical analysis
''The hourly chart offers a trapped bias between the trendline support and the overhead resistance near $1,920. Meanwhile, the W-formation is pulling in the price towards the neckline near $1,901.''
Gold, live market, H1 chart
At this juncture, the price would be expected to give back some ground as profits are taken off but trend-followers will potentially reengage all the while the Ukraine crisis remains in the driving seat. The situation is fluid, with rate futures and bond prices whipsawed which is benefitting the yellow metal.
On the one hand, war threatens to undercut a global economic recovery while on the other, inflation unleashed by an oil price surge that will be hard for central bankers to overlook. Inflation is also likely to act as a tax on consumers, analysts at TD Securities argued. In this regard, the Federal Reserve will be a key event this month. ''The market is repricing expectations for a 50bp hike for March, in support of gold bugs,'' the analysts at TDS said.
End of update.
Gold (XAU/USD) rises for the second consecutive day on Tuesday, back above the $1900 mark so far, and it will likely remain higher as geopolitical tensions persist. Ukraine – Russia conflict does not appear to end in the short term, despite Monday’s first round of talks between officials from both countries. At the time of writing, XAU/USD is trading at $1926.
US ISM Manufacturing advances firmly, and New Orders reach a five-month high
The US economic docket featured the first tranche of data in the week. The ISM Manufacturing PMI for February rose to 58.6, higher than the 58 estimated by analysts. In addition, ISM’s new orders advanced close to four points, reaching a five-month high of 61.7.
“The US manufacturing sector remains in a demand-driven, supply chain-constrained environment,” Timothy Fiore, chair of ISM’s Manufacturing Business Survey Committee, commented in the report. The omicron variant “remained an impact in February; however, there were signs of relief, with recovery expected in March.”
Furthermore, the ISM Price Index rose to 75.6 in the same period, higher than estimations but lower than January 76.1, reflecting easing price pressures.
Market sentiment stays in the driver’s seat
Investors’ mood remains depressed. European and US equity indices extended losses, while safe-haven currencies remained bid in the FX space, except for rising peers linked to commodities, like the AUD, CAD, and NZD.
Read more: Silver Price Forecast: XAG/USD bull’s eye $25.00 as Ukraine/Russia war extends – War update.
Meanwhile, the US Dollar Index, a gauge of the greenback’s value, is up close to 0.50%, sitting at 97.21, despite falling US Treasury yields. The US 10-year T-note plunges 12 basis points, at 1.719%, weighing on the USD value against the yellow metal.
Therefore, gold would remain firmly upwards unless geopolitical conditions improve, meaning a ceasefire and peace talks between Ukraine and Russia.
XAU/USD Price Forecast: Technical outlook
XAU/USD is upward biased, pressuring February 28 high at $1927.48. If XAU bulls defend the June 1, 2021 high, resistance-turned-support at $1916.61, they could remain hopeful of attacking the $2000 mark.
If that scenario plays out, XAU/USD’s first resistance would be October 12, 2020, high at $1933.29. Breach of the latter would expose January 6, 2021, high at 1959.40, and February 24 YTD high at $1974.48.
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.