- In the week, XAU/USD is losing so far 0.30%, snapping three consecutive weeks of gains.
- A risk-on market mood, and high US T-bond yields, weighed on the non-yielding metal.
- XAU/USD Technical Outlook: Downward biased, as a bearish harami candle chart pattern looms.
Gold (XAU/USD} is set to end the week with losses after reaching a daily high at $1974.48 on Thursday. Breaking news that Russia would be open to sit down and talk with the Ukrainian Government, increased appetite for riskier assets, to the detriment of save-haven assets, like precious metals and low yielder currencies. Said that XAU/USD remains beneath the $1900 handle, trading at $1892 at the time of writing.
A busy week in the global financial markets witnessed how fragile the market sentiment is. The Ukraine-Russia conflict does not ease, and in fact, as of late, reports said that attacks on Ukraine’s capital Kyiv increased. Ukrainian Ambassador to the US Markarove stated that Russia’s attack on Ukraine has been more brutal, while Kyiv’s mayor reported blasts within minutes, which were heard close to a power station in Kyiv.
Despite the aforementioned, the market mood persists upbeat, as shown by US equities trading in the green, probably on month-end flows. Nevertheless, the greenback falls 0.50% sits at 96.68, while the rise in US Treasury yields weighed on the non-yielding metal, with the 10-year note up 1.5 bps sitting at 1.988%.
XAU/USD, in the last two days, rallied to a one-and-a-half-year high at $1,974.48 early Thursday but has plunged since then and so far failed to cling to the $1900 area. Worth noting that some investors are aware that the Russian Central Bank has some reserves in gold and booked profits ahead of reaching the $2,000 mark in fears that President Putin could use some of those to support the Russian ruble.
The US economic docket reported some macroeconomic data earlier. Durable Good Orders for January smashed expectations rising 1.6% m/m, while Fed’s favorite measure of inflation, PCE annually based, broke the 6% threshold. That said, Fed odds of hiking rates in the March meeting have risen. Later, the UoM Consumer Sentiment for February kept above the 60.0 threshold, but trailed January readings.
Gold Price Forecast: XAU/USD
XAU/USD price action in the week saw a move of $100 on Thursday, as Russia/Ukraine tensions increased. However, Thursday’s candle left a huge wick above the real body, demonstrating intense selling pressure mounted above $1,909. That, alongside Friday’s price action, confirms a bearish harami pattern that would be validated once XAU/USD breaks the $1,878.09 support.
XAU/USD’s first support level would be February 24 daily low at $1,878.09. Breach of the latter would expose the 9-month-old resistance/support trendline around $1,850-55, and then a test of the 50-day moving average (DMA) at $1,829.76.