Gold Price Analysis: XAU/USD holds near $1840 ahead of key Fed meeting as geopolitical worries rise


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  • Gold is holding near $1840 despite the stronger USD on a heightened safe-haven bid amid geopolitical concerns.
  • What is expected to be a very hawkish Fed meeting will test gold’s resilience this week.

As geopolitical concerns mount about a potential Russian military incursion into Ukraine, spot gold (XAU/USD) prices are finding support via safe-haven demand and, for now, shrugging off the negative headwinds from a firmer US dollar. XAU/USD has been gradually rising since the Monday Asia Pacific session open in the mid-$1830s to current levels around $1840. The subdued tone to trade in US government bond markets, where long-term yields are modestly lower (10 and 30-year -1bps), is also acting as somewhat supportive for the yield-sensitive precious metal.

A Goldman Sachs note warning that the Fed might lift interest rates at all of the remaining meetings this year got a lot of attention amongst analysts this morning but doesn’t seem to have moved the needle much for markets. Admittedly, US 2-year yields are about 2bps higher, but as noted, the rest of the yield curve is flat to lower with geopolitics the main topic of discussion so far on the day. That suggests the main driver of Monday’s USD upside (DXY +0.3% to near 96.00, near two-week highs) is safe-haven more than Fed-related, which is why gold has been able to trade on a stronger footing.

Whether gold’s resilience to ongoing dollar advances can last is another question. This week’s Fed meeting is likely to be a hawkish affair, though the bar for the meeting to exceed the market’s very hawkish expectations is seemingly quite higher. Gold bulls will be hoping that at the very least, the precious metal is able to hold within its recent $1830-$1845ish range.

A further escalation in the tense geopolitical situation in Eastern Europe might be enough to send XAU/USD back above $1850 if also coupled with less hawkish than feared Fed vibes. The other major events to watch out for this week include US earnings, which could shift equity and also macro sentiment, and the Advance Q4 GDP growth estimate (on Thursday) and December Core PCE (on Friday).

XAU/Usd

Overview
Today last price 1838.21
Today Daily Change 6.28
Today Daily Change % 0.34
Today daily open 1831.93
 
Trends
Daily SMA20 1815.78
Daily SMA50 1805.79
Daily SMA100 1794.54
Daily SMA200 1804.72
 
Levels
Previous Daily High 1843.27
Previous Daily Low 1828.55
Previous Weekly High 1847.95
Previous Weekly Low 1805.84
Previous Monthly High 1830.39
Previous Monthly Low 1753.01
Daily Fibonacci 38.2% 1834.17
Daily Fibonacci 61.8% 1837.65
Daily Pivot Point S1 1825.9
Daily Pivot Point S2 1819.86
Daily Pivot Point S3 1811.18
Daily Pivot Point R1 1840.62
Daily Pivot Point R2 1849.3
Daily Pivot Point R3 1855.34

 

 

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