Gold Price Forecast: XAUUSD consolidates just ahead of the $2,000 threshold

Gold Price trades at around $ 1,995 a troy ounce, holding on to modest intraday gains after a series of first-tier events spurred volatility earlier in the day. XAUUSD recovered from an intraday low of $1,970.03 a troy ounce but was unable to retain gains above the $2,000 threshold. It briefly traded above it during the European session, getting a boost from the European Central Bank which announced it would wind down its Asset Purchase Program faster than planned. However, XAUUSD gave up ground after President Christine Lagarde highlighted the increased risk to the economy resulting from the Ukraine-Russia conflict.

A fourth round of peace talks ended without any agreement. The latest on the matter was  Russian President Vladimir Putin saying that Moscow will keep its energy-related commitments, weighing on crude oil prices, which trade in the red for the day, and putting a temporal halt to fear-related selling of high-yielding assets. 

Meanwhile, US stocks remain under selling pressure, with the three major indexes trading in the negative territory, although off their daily lows. US indexes are being also affected by local inflation data, as it soared to a multi-decade high in February, which somehow, anticipated an even more aggressive US Federal Reserve. The US central bank has pretty much granted a 25 bps rate hike this month, but the latest CPI readings have lifted odds for a 50 bps hike as soon as next week.  

Also read: Markets, Oil, Gold and EUR/USD: A real ray of light

Earlier in the day, the European Central Bank has released its monetary policy decision. As widely anticipated, the central bank has left rates unchanged. However, policymakers noted that if “the medium-term inflation outlook changes and financing circumstances become incompatible with further progress toward our 2% target, we will alter our net asset purchase schedule in terms of magnitude and/or length.” A hawkish stance sent EUR higher, providing support to Gold Price, which reached an intraday peak of $2,009.09 a troy ounce, although the metal quickly retreated amid ECB President Lagarde expressing concerns about the war effect on local growth and inflation

Additionally, the US published the February Consumer Price Index, which hit a multi-decade high of 7.9% YoY as expected. The core reading surged to 6.4%, also as anticipated by the market.

XAUUSD technical outlook

Gold Price is stuck around the 23.6% retracement of its 2022 rally at around $2,002.00, still unable to find fresh directional impetus. Technical readings in the daily chart maintain the risk skewed to the upside, as technical indicators are resuming their advances within positive levels after correcting extreme overbought conditions. At the same time, a bullish 20 SMA keeps advancing well below the current level, currently converging with the 50% retracement of the aforementioned rally at $1,926. A slump towards the latter seems out of the table at the time being, particularly considering increased tensions in the geopolitical front.

On the other hand, and beyond the daily high, XAUUSD could extend gains towards $2,025, en route to 2,049. Strong support comes at $1,955, the 38.2% retracement of the aforementioned rally.