Gold fluctuated slightly around the $1,900 level on Wednesday, after hitting a nine-month high in the previous session as investors focused on inflationary risks, the possibility of central banks’ tighter monetary policy and the impact of the escalating Ukraine crisis.
“The risk of escalation of the crisis between Russia and Ukraine has decreased”
Spot gold was trading at $1,900, up 0.11% on a daily basis, at the time of writing, after hitting $1,913.89 in the choppy trading session on Tuesday, the highest since June 1st. U.S. gold futures fell 0.26% to $1,902. Citing the crisis between Russia and Ukraine, DailyFX’s currency strategist Ilya Spivak makes the following assessment:
The main catalyst here, at least in terms of new uncertainty, is the reduced risk of escalation that has caused us to have exhausted the worst of this crisis.
The United States, the European Union and Britain announced plans to target banks and the elite, while Germany halted a major gas pipeline project from Russia, which they say is recruiting more than 150,000 troops near Ukraine’s borders. with this cryptocoin.com As we have covered in its news, Moscow continues to deny that it is planning an invasion.
Ilya Spivak: The general direction of the gold price will be downwards
U.S. Treasury bond yields rose on Tuesday as markets predicted higher interest rates as the Federal Reserve is expected to move in March. While money markets previously predicted a 50 basis point rate hike next month at around 60%, recently they are pricing in only 36.5% probability.
Higher interest rates and rate hikes increase the opportunity cost of holding non-interest-paying gold, reducing the attractiveness of bullion. After evaluating the Fed’s stance, Ilya Spivak points to the following levels:
Markets are not moving in a straight line as the Fed continues to tighten and real rates continue to rise. However, after this Ukraine crisis, I predict that the general direction of gold will be downwards. Gold could cross $1,750 and test the $1,700 level.
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