Gold Price Forecast: XAU/USD stays firmer around $1,910 as traders guess Russia’s next move
- Gold price retreats from $1878.10 but may find offers near $1,908 as investors’ risk appetite expands.
- The expectations of an aggressive monetary policy have underpinned the greenback against gold.
- Inflation to soar further amid rising crude oil prices, Russia's expected bombardment of Kyiv eyed.
Update: Gold (XAU/USD) holds onto late Thursday’s rebound from $1,878 around $1,910 during a sluggish Asian session on Friday.
The market panicked on Russia’s invasion of Ukraine the previous day, which in turn propelled gold prices due to its traditional safe-haven status during early Thursday. However, mixed updates by the volatile day’s end joined a firmer US dollar to print a negative closing of the XAU/USD.
The metal’s weakness during late Thursday could be linked to the hopes of a halt in further causalities as the West shows readiness to step in and Russia signals willingness to discuss the “Terms of Ukraine's surrender.”
The latest rebound might have taken clues from CNN’s news citing the Russian military’s readiness to bombard Kyiv, as well as comments from Ukrainian Envoy to Japan who conveyed that the Ukrainian government lost control over Chernobyl nuclear plant.
In addition to the risk catalysts, Fed’s key inflation gauge, namely Core PCE Price Index for January, will also be important to watch. Additionally, US Durable Goods Orders and Fedspeak can entertain gold traders as well.
End of update.
Gold price is hovering near $1,900, off from Friday’s low at $1,878.10 after falling on its face from Thursday’s high of $1,974.48. The precious metal has regained some strength and moving higher but is likely to sense selling pressure near $1,908 levels.
On Thursday, the precious metal nosedived with much more acceleration than it showed while scaling higher. It seems that the third law of motion kicked in and the yellow metal fell like there is no other day.
Despite the fact that the risk-off impulse is still intact owing to the negative developments in the Russia-Ukraine war, the investors have underpinned the greenback against the precious metal. The rationale behind the fall in the gold prices can be tagged to the rising bets over an aggressive tightening policy by the Federal Reserve (Fed) post the Russia-Ukraine crisis. The unstoppable crude oil prices are set to move the prices of finished goods higher. Expectations of soaring inflation in an already high inflation market may force to central banks to adopt some strict measures to contain the situation.
Apart from the aggressive tightening monetary policy, improvement in the US GDP numbers and slippage in the weekly Initial Jobless Claims have hammered the gold prices. The US GDP numbers have improved to 7% while the Initial Jobless Claims have reduced to 232K against the previous print of 249K.
The US dollar index (DXY) continues to remain rangebound post the sanctions announcement by the US on Russia in response to its military action on eastern Ukraine. Meanwhile, the benchmark 10-year US Treasury yields are trading at 1.97%
Gold Technical Analysis
On an intraday scale, XAU/USD is sensing selling pressure near the 21-period Exponential Moving Average (EMA), which is trading around $1,908. The Relative Strength Index (RSI) (14) has shifted its trading range from 20.00-40.00 to 40.00-50.00, which indicates a consolidation ahead.
Gold 15-min chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
