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Gold Price Forecast: XAU/USD drops though remains above $1930 amid a positive market mood

  • The yellow metal is set to finish the week with losses is down almost 3%.
  • Russia-Ukraine talks stuck as postures of both sides stand unchanged.
  • Fed’s Bullard and Waller favor 50-basis points increases at the bank’s benchmark rate.
  • Fed’s Kashkari expects neutral rates at 2%, while the balance-sheet reduction would have to be at double of previously QT.

Gold (XAU/USD) drops for the third time in the week amid a mixed market mood courtesy of continuing talks between Russia-Ukraine, inflation woes, and central bank tightening, keeping investors leaning towards safety assets. At the time of writing, XAU/USD is trading at $1929 a troy ounce.

Market mood is fluctuating, though of late improved. European equities closed the session in the green, while its North American counterparts are recording gains. The greenback holds its reins, with the US Dollar Index above 98.19 up in the day 0.22%, a headwind for the non-yielding metal, despite that US Treasury yields are falling.

Russia-Ukraine peace talks continue, though hostilities remain. Given mixed signals from both sides, discussions appear to be stuck on a mid-point with no advancement. Although reports from Russia said that Russia – Ukraine’s posture regarding neutrality and not joining NATO are closely aligned, reports from Ukraine said that are intended to provoke tension in media, as Ukraine’s stance of a ceasefire, withdrawal of troops, and strong security guarantees are not negotiable.

Elsewhere,  in the middle of the week, the Federal Reserve hiked rates 25 basis points with an 8-1 vote, with St. Louis Fed President Bullard being the dissenter. On Friday, Bullard  said that he wanted the US central bank to implement a balance-sheet reduction plan while recommending the FOMC to “try to achieve a level of policy rate above 3% this year.” Later, Fed Governor Chris Waller said he favors 50 bps increases in the “near future” while emphasizing that current data “is screaming” for 50 basis points hikes.

Continuing the Fed speaking parade, Minnesota Fed’s Kashkari commented that he sees a neutral rate at 2%. If inflation persists, the US central bank would have to raise rates above neutral. Regarding the Quantitative Tightening (QT) he expected the Fed to tighten at double of the pace of previously reduction.

Meanwhile, the US economic docket featured Existing Home Sales for February came at 6.02M lower than the 6.1M foreseen, while the Consumer Board (CB) Leading Index rose by 0.3%, higher than the 0.2% estimated.

Technical levels to watch

XAU/USD

Overview
Today last price1926.89
Today Daily Change-15.84
Today Daily Change %-0.82
Today daily open1942.73
 
Trends
Daily SMA201942.21
Daily SMA501873.1
Daily SMA1001838.95
Daily SMA2001813.6
 
Levels
Previous Daily High1949.8
Previous Daily Low1923.33
Previous Weekly High2070.54
Previous Weekly Low1958.82
Previous Monthly High1974.51
Previous Monthly Low1788.67
Daily Fibonacci 38.2%1939.69
Daily Fibonacci 61.8%1933.44
Daily Pivot Point S11927.44
Daily Pivot Point S21912.15
Daily Pivot Point S31900.97
Daily Pivot Point R11953.91
Daily Pivot Point R21965.09
Daily Pivot Point R31980.38

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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