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Gold Price Forecast: XAU/USD retreats to $1930 as Ukraine-Russia will hold talks – War update

  • Gold slides for the first time on the week, down 0.70% amid an improved market mood, on Russia-Ukraine’s second round of talks.
  • US Treasury yields rise, and the US Dollar follows through.
  • XAU/USD Technical Outlook: Upward biased, though it might print a leg-down before resuming the uptrend.

Gold (XAU/USD) spot retreats from $1948 daily high to current levels, as reports that Ukraine-Russia will hold a second round of discussions later today, as reported by Tass agency citing an official to the Ukraine presidential office. The headline shifted the market mood to risk-on, to the detriment of safe-haven assets like gold, while European and American indices record gains. At the time of writing, XAU/USD is trading at $1931.

In the meantime, US Treasury yields are recovering some ground, led by the 10-year T-note benchmark, rising eight basis points up to 1.792%, weighing on the non-yielding metal. Further, the greenback continues its advance, record gains for the third straight session, up 0.20%, sitting at 97.588.

Russia-Ukraine war update

Ukraine and Russia will meet for a second round of peace talks. The Kremlin reported that Russia’s delegation is ready to continue negotiations though it is unclear if Ukrainian officials will attend. Contrarily the Ukraine Foreign Minister said that Russia’s demands are unchanged from what Russian President Putin said at the start of the war. Hence, the possibilities of a ceasefire are minimal.

US President Biden announced the US would join allies and ban Russian flights from using US airspace. In the meantime, the US Department of Justice is assembling a task force to go after crimes of Russian oligarchs and join EU allies in seizing assets.

Federal Reserve Chair Jerome Powell remarks

In the meantime, Federal Reserve Chair Jerome Powell said, “We expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month,” and added that the US central bank would follow with reductions to its $8.5 trillion assets.

The US economic docket featured the ADP Employment Change for February, which rose 475K higher than the 388K, estimated and could probably be a prelude of Friday’s Nonfarm Payrolls report.

XAU/USD Price Forecast: Technical outlook

XAU/USD’s steeper uptrend appears to ease. In the last four days, volatility levels have been “extreme,” pushing the non-yielding metal to an 18-month-high, to $1974.48, followed by a retracement to $1883. Wednesday’s price action retreated from $1948 daily high to June 1, 2021, high at $1916.03, but gave way to gold bulls, who pushed the prices to October 12, 2020, high at $1933.29.

That said, XAU/USD bullish bias still. However, before resuming the uptrend, a leg-down could not be ruled out. If that scenario plays out, XAU/USD’s first support would be June 1, 2021, high at $1916.03. Breach of it would expose the psychological $1900 mark, followed by Pitchfork’s channel top-trendline around $1885.

In the case of breaking upside, the first resistance would be October 12, 2020, high at $1933.29, followed by March 1 high at $1950.30 and the YTD high at $1974.48.


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