Gold Price Analysis: XAU/USD hit as positive Putin commentary sparks risk on

More positive-sounding rhetoric from Russian President Vladimir Putin, who on said there has been a “certain positive shift” in talks with Ukraine, thus keeping speculation about/hopes for a near-term Presidential meeting between Putin and Zelenskyy alive, sparked risk on midway through European trade. Spot gold (XAU/USD) prices, which had been consolidating near to but just under the $2000 mark, have thus been under significant selling pressure in recent trade as safe-haven assets are dumped in favour of riskier assets such as stocks. XAU/USD fell as low as the $1960s, down more than 1.5% on the day and at weekly lows, with the precious metal now testing key support in the form of the late 2020/early 2021 highs in the $1960 area.

Trading conditions remain difficult. As long as high-level talks between Ukraine and Russia continue and there is speculation about a meeting between the President’s hopes for a ceasefire/peace deal will likely keep a lid on spot gold prices for now. But developments on the ground in Ukraine don’t make for optimistic reading; the fighting remains intense, with numerous major Ukrainian cities already or on the verge of being surrounded. Russian forces are being accused of committing numerous war crimes and there is even chatter about Ukrainian forces beginning to get the upper hand in the fighting in some parts of the country. Western leaders are warning about the possibility Russia might start using its more barbaric weapons such as thermobaric bombs and evene chemical weapons.

It's unthinkable at this point that after all that has taken place, the West would quickly ease sanctions on Moscow even in the unlikely event that Russia and Ukraine do reach a peace deal in the near term. That suggests that severe disruptions to Russia commodity exports as Western sanctions force its decoupling from much of the global economy won’t go away any time soon. Gold is thus likely to retain a substantial bid as investors continue to seek greater degrees of inflation protection. Whether Friday’s lows in the $1960 proves more than an intra-day low remains to be seen.