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Gold Price Analysis: XAU/USD consolidates into the North American close ahead of NFP

  • Gold has been on the front foot since the European morning, bouncing from the $1920 level into the $1940s.
  • A ramping up of energy-related tensions between EU nations and Russia plus risk-off flows have benefitted the precious metal.

Update: The gold price is in a phase of consolidation ahead of the Nonfarm Payrolls on Friday. XAU/USD is trapped between daily resistance and support, ending a touch higher on Thursday by some 0.2% near $1,940. The lack of progress in peace talks between Russia and Ukraine boosted demand for safe-haven currencies such as the US dollar which is hamstringing bullish advances in gold.

The greenback is on track for a rise of around 1.6% for the month of March, and around 2.8% for the first quarter while hope from earlier this week that peace talks would lead to a ceasefire in Ukraine five weeks after Russia's invasion has dwindled. Markets await them to start again on April 1 as well as Nonfarm Payrolls.

End of update

Even though the White House’s announcement of a historic crude oil reserve release has triggered downside in global oil markets, contributing to a modest easing of inflation fears, geopolitical concerns and further month-end downside in US yields are keeping gold supported. Spot prices (XAU/USD) found good support in the $1920 area during the European session and have since advanced into the $1940s to now trade with on-the-day gains of about 0.6%. Russian President Vladimir Putin announced on Thursday that he had signed an order that European nations would need to pay for Russian gas by opening rouble accounts at Russian banks starting from 1 April (this Friday).

The announcement marks a ratcheting up of economic tensions between Russia and Europe and seemingly increases the risk that Russian gas flows to Europe are halted. If Russia did halt gas flows into Europe, this would have a catastrophic impact on the Eurozone economy (likely throwing it into immediate recession). The implications for ECB policymaking would not be immediately clear, but the uncertainty of the whole situation has triggered a flight to safety. Stocks are down globally, as are bond yields as investors pair risk heading into the quarter-end, creating positive trading conditions for gold.

Energy-related tensions between EU nations and Russia come against a backdrop of waning optimism relating to recent alleged progress in Russo-Ukraine peace talks. Talks will recommence on Friday, but if the broader geopolitical picture continues to darken, XAU/USD might be in with a shot of testing recent highs in the $1960s. Of course, US economic data remains a focus with the official jobs report for March coming on Friday.

Labour market data out already this week has been robust, indicating it should be a strong release, which should further solidify expectations for a 50 bps rate hike from the Fed at its next meeting. Given there is a lot of Fed hawkishness already in the price, it's questionable as to how much downside risk Friday’s US jobs report poses to gold.

XAU/Usd

Overview
Today last price1944.35
Today Daily Change11.49
Today Daily Change %0.59
Today daily open1932.86
 
Trends
Daily SMA201953.88
Daily SMA501894.16
Daily SMA1001850.56
Daily SMA2001819.21
 
Levels
Previous Daily High1938.65
Previous Daily Low1916.01
Previous Weekly High1966.18
Previous Weekly Low1910.83
Previous Monthly High1974.51
Previous Monthly Low1788.67
Daily Fibonacci 38.2%1930
Daily Fibonacci 61.8%1924.66
Daily Pivot Point S11919.7
Daily Pivot Point S21906.53
Daily Pivot Point S31897.06
Daily Pivot Point R11942.34
Daily Pivot Point R21951.81
Daily Pivot Point R31964.98

Author

Joel Frank

Joel Frank

Independent Analyst

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018, specialising in the coverage of how developments in the global economy impact financial asset

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