According to market analyst Anil Panchal, gold prices remain under pressure near intraday lows, but are stalling further declines amid market indecision.
“Gold prices will extend downside correction on hawkish Fed”
The yellow metal struggled to continue its bounce from Friday’s $1,958 region, or a one-week low, and fluctuated around $1,960 on the first day of the new week. Hopes for a diplomatic solution to end the war in Ukraine have boosted investor confidence, which is evident in a generally positive tone in the stock markets. The analyst states that this situation also reduces the demand for traditional safe-haven assets and puts pressure on the precious metal.
Apart from that, higher US Treasury yields, supported by hawkish Fed expectations, were seen as another factor diverting flows from bearish yellow gold. Recent large increases in commodity prices have fueled concerns about a major inflationary shock and strengthened bets for an imminent Fed rate hike. Therefore, the focus is now on a two-day FOMC monetary policy meeting, which begins this Tuesday.
cryptocoin.com As we reported, expectations that the Fed will raise interest rates by 25 basis points pushed the benchmark 10-year US government bond above the 2.0% threshold. According to the analyst, this gave some support to the US dollar, which in turn contributed to the tone of bidding surrounding dollar-denominated gold. The analyst reminds that the fundamental ground supports the possibility of further short-term depreciation for gold prices, given that the worst of the Ukraine crisis is likely behind.
Developments in Ukraine will also be important for a clearer gold forecast
The first downside of the yellow metal may be linked to the brighter progress in the Ukraine-Russia peace talks. But comments from Moscow and Kiev over the weekend suggest that policymakers are far from ready to back out. According to the analyst, stronger US Treasury rates and pessimism surrounding China’s coronavirus conditions could be affecting gold prices as well as market sentiment.
The analyst states that China is one of the largest gold consumers in the world, and fears of new Covid-19 have negatively affected gold prices due to the highest daily infections in two years. However, rumors around a halt in gold production and rising Indian demand for gold, as well as inflation fears, keep the yellow metal on the bulls’ radar, according to the analyst.
However, St. Louis Federal Reserve (FRED) data shows that record high US inflation expectations per 10-year breakeven rate of inflation are strengthening US Treasury rates, increasing pressure on gold prices as market players await this week’s key Fed minutes. In addition to the Fed, Ukraine updates and headlines from China will also be important for a clearer gold forecast.
Gold prices technical analysis: More weakness expected
Market analyst Anil Panchal notes that the downside break of the biweekly ascending trendline combines the bearish MACD signals and the descending RSI line to keep gold sellers hopeful. However, the convergence of the 100-SMA and an upward sloping trendline from Feb 3, around $1,945, looks like a tough nut to crack for golden bears. The analyst draws attention to the following levels:
If all gold sellers seize the $1,945 support, the 200-SMA level of $1,844 will act as the buyers’ last defense.
Meanwhile, the analyst reminds that the resistance line, which turned into support near $1,992, preceded the psychological magnet of $2,000 to challenge the short-term recovery of gold prices, pointing to the following levels:
Following this, multiple hurdles near $2,035 and $2,060 could be tested before leading the brave bulls to the $2,070-75 area, which contains the latest high and 2020 high.
Overall, he sees gold likely to witness a pullback towards short-term support convergence, but also notes that the gold bulls are not yet out of the arena.
Contact us to be instantly informed about the last minute developments. twitter‘in, Facebookin and InstagramFollow and Telegram and YouTube join our channel!
Disclaimer: The articles and articles on Kriptokoin.com do not constitute investment advice. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, asset or service in this article.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.