Following another stormy day of trading in global markets, the gold price is firm in Asia and stabilizing around the $2,000/oz mark. US stocks conclud
Following another stormy day of trading in global markets, the gold price is firm in Asia and stabilizing around the $2,000/oz mark. US stocks concluded the day down on Thursday, driven by a slide in technology sectors, with markets expecting the worst in what was a 7.9 percent annual increase rate in US consumer prices in February. This was the greatest yearly inflation increase in 40 years.
Meanwhile, investors were concerned about Russia’s invasion of Ukraine. With the bombardment of the country continuing unabated, and discussions between Ukraine and Russia’s foreign ministers on Thursday failing to provide any relief to the war, traders flocked to safe havens such as GOLD.
Energy stocks climbed, helping to limit the day’s decline, despite oil prices falling following recent high advances. The gold price was firming on Thursday as equities markets retraced some of Wednesday’s euphoria following the failure of Ukraine-Russia talks to produce a ceasefire agreement.
XAU/USD
Greater inflation predictions are not a popular issue in financial markets. Inflation in the United States likewise reached fresh 40-year highs, and the European Central Bank rebalanced its planned asset purchases for the second and third quarters in a hawkish manner.
Gold is up 0.1 percent on the day and has remained close to $2,000 per ounce, as its safe-haven appeal has been bolstered by a lack of movement in talks between Russia and Ukraine. Gold futures closed 0.6 percent higher at $2,040.
Earlier this week, a gold rush to safe-haven assets lifted the yellow metal close to record levels reached in August 2020; however, they crashed as profit-taking began, with virtually little substance to the shift in risk sentiment. Markets are looking for excuses to buy at bargain rates in global stock markets, and even the slightest hint of a ceasefire between Russia and Ukraine has sparked a Black Friday sale stampede into discounted assets.
Gold prices are being driven by the Ukraine conflict
Ukraine’s president, Volodymyr Zelensky, told ABC News earlier this week that he is willing to “negotiate” on the status of two breakaway pro-Russian provinces that President Vladimir Putin acknowledged as autonomous immediately before launching the invasion on February 24.
“I cooled down on this issue a long time ago after we realized that… NATO is not prepared to welcome Ukraine,” Zelensky remarked.
“The alliance is terrified of contentious issues and conflict with Russia,” the president remarked.
Concerning NATO membership, Zelensky told an interpreter that he did not want to be president of a “nation that is asking anything on its knees.”
Investors took stock and dumped their gold holdings. The maneuver was quick and punishing for stranded bulls, resulting in a supply cascade. However, in more recent news, Ukraine’s and Russia’s foreign ministers failed to strike an agreement during the highest-level meeting in three weeks of hostilities on Thursday.
This week, the bombing and airstrikes have continued to damage Ukraine, particularly the city of Mariupol. Both Ukraine’s Dmytro Kuleba and Russia’s Sergei Lavrov stated in their respective press appearances following the meeting that they had achieved no progress. As a result, traders are returning to safe-haven assets such as gold.
According to the Ukrainian, his colleague “seemed to have come to speak, not to decide.” “They want Ukraine to capitulate.” “This is not going to happen,” Kuleba stated emphatically.
Meanwhile, Wall Street was bleeding hard on Thursday as US inflation statistics touched a four-decade high, in addition to the simmering uncertainty surrounding Russia’s invasion of Ukraine. The data has sealed the deal that the US Federal Reserve will raise key interest rates at the end of its monetary policy meeting next week.
All three major indices are in the red, albeit they have recovered from session lows. According to the Labor Department, consumer prices rose 7.9 percent year on year in February, the highest rate in forty years. As a result, the dollar index (DXY) rose more than 0.50 percent to 98.512 following the data, after sliding 1.17 percent the day before.
The risk is not that the Fed will raise rates, but that the FOMC will act more aggressively to contain inflation in the next year, as promised by Fed Chair Jerome Powell last week.
Gold – XAU/USD – Technical Outlook
On an hourly chart, the price has met support and surged higher, implying that there is more to come to the upside in the coming days. That being stated, a break of the $2,020 raises the possibility of a daily correction. According to the weekly chart, the price has touched a 61.8 percent golden ratio at $1,974. Violation of this level can open up further room for selling until 1,950 or even lower towards 1,924.
Conversely, the uptrend and a violation of the 2,011 level can open up further room for buying until 2,035. Good luck!
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