- Gold’s fate hinges on the much-awaited outcome of the March Fed meeting.
- Ukraine crisis, soaring inflation and growth concerns remain in play.
- Daily chart suggests more pain for gold price after this week’s sell-off.
Having lost 3.5% so far this week, gold price is attempting a tepid recovery from two-week lows of $1,907 reached Tuesday. The mixed market sentiment and a broad-based US dollar weakness are aiding the rebound in the bright metal alongside the ongoing correction in the Treasury yields across the curve. Investors turn cautious and refrain from placing any fresh bets on gold price amid mixed news on the Ukraine crisis and pre-Fed anxiety.
The Fed is widely expected to hike the key rates by 25bps this Wednesday, its first post-pandemic rate lift-off. Although the world’s most powerful central bank’s outlook on future rate hikes and balance sheet reduction will hold the key amid 40-year high inflation and ongoing Russia’s invasion of Ukraine.
Early Wednesday, Ukrainian President Volodymyr Zelenskiy said in a video address released that the positions of Ukraine and Russia at peace talks were sounding more realistic but more time was needed.
On Tuesday, gold price fell sharply, extending a three-day downtrend, tracking the heavy sell-off in oil prices on hopes for diplomacy in the Ukraine crisis. The optimism, however, faded after Russia's President Vladimir Putin said that Kyiv is not serious about finding a mutually acceptable solution, according to Bloomberg. The greenback staged a notable rebound as the market turned risk-averse while gold price also found some comfort from cooling off hope on peace talks.
Gold Price Chart - Technical outlook
Gold: Daily chart
As observed on the daily chart, gold price closed Tuesday below the two key support levels of the one-month-old rising trendline and the upward-sloping 21-Daily Moving Average (DMA), now at $1,959 and $1,936 respectively.
The downside breakout leaves floors open for more weakness, as the March lows of $1,901 remain on gold sellers’ radars.
If that level is breached convincingly then a fresh decline towards the $1,880 demand area could be in the offing.
Further south, the bullish 50-DMA at $1,870 could come to the buyers’ rescue.
The 14-day Relative Strength Index (RSI) is trading just beneath the midline, currently at 49.20, pointing to more downside risks.
On the flip side, immediate resistance is seen at the mildly bullish 21-DMA, above which bulls will look to recapture the abovementioned trendline support now resistance.
The recovery could regain momentum above the latter, recalling bulls to take on the $2,000 mark once again.
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