These Dates and Developments are Important for Gold Next Week!

Gold started the week under heavy bearish pressure and dropped to its lowest level in more than two weeks at $1,895 late Wednesday. After rebounding towards $1,950 in the second half of the week, the yellow metal lost its traction and ended up falling more than 2% on a weekly basis. What key data and developments await the yellow metal next week, and where does the gold technical outlook and sentiment survey point?

Developments affecting gold in the markets last week

cryptocoin.com As we covered in the news, rising hopes for a diplomatic solution to the Russia-Ukraine conflict allowed risk flows to dominate financial markets at the beginning of the week and made it difficult for gold to find demand. Ukrainian negotiator and presidential adviser Mykhailo Podolyak said on Sunday that Russia has spoken constructively and that they could reach some results in a matter of days. Similarly, Russian delegate Leonid Slutsky noted that significant progress had been made in the final round of negotiations.

Data from the US on Tuesday showed that the Producer Price Index (PPI) remained unchanged at 10% year-on-year, with rising US Treasury yields causing gold to continue its decline. Meanwhile, the market mood remained upbeat after an adviser to Ukrainian President Volodymyr Zelenskyy said they expected to reach a peace deal with Russia in a few weeks at the earliest, or by May at the latest.

The US Federal Reserve announced that it increased the policy rate by 25 basis points (bps) on Wednesday, after its two-day policy meeting. The revised Foresight Summary revealed that policymakers expect six more rate hikes by the end of the year. The initial market reaction to the Fed’s hawkish rate outlook pushed the 10-year U.S. Treasury yield to 2.23%, the highest since May 2019, forcing gold to sink below $1,900. During the press conference of FOMC Chairman Jerome Powell, interest rates started to decline and the dollar lost altitude, triggering a recovery below.

Jerome Powell noted that they expect inflation to decline in the second half of the year despite the increasing uncertainty. The president was confident and assured markets that they would fight inflation without hurting economic activity. “We are strongly determined not to let hyperinflation settle in,” Powell said. “The good news is that the economy and the labor market are pretty strong, they can handle interest rate hikes,” he said.

The negative change in risk sentiment on Thursday helped gold continue its recovery. Officials from Russia and Ukraine denied reports that they were approaching a peace agreement. Later in the day, Reuters reported that there is still a huge gap between the positions of Ukraine and Russia. “Russia may be considering a chemical weapons attack,” said US Secretary of State Antony Blinken.

Gold fluctuated in a relatively narrow range on Friday as investors acted cautiously ahead of the weekend.

What is on the agenda of the next week that is important for gold?

February Durable Goods Orders and Thursday’s Markit Manufacturing PMI will be the only high-end data to come from the US. Therefore, market participants will continue to focus on the headlines surrounding the Russia-Ukraine crisis. Market analyst Eren Sengezer makes the following assessment:

Gold’s response to changes in risk mood has been pretty clear since the end of February. Should the developments of the next week point to a further escalation of the conflict, gold could gather strength and start to erase this week’s losses.

On the other hand, the analyst reminds that if the markets continue to be hopeful about the truce, the precious metal may come under selling pressure again. According to the analyst, it is difficult to say whether we will have a clear picture of what will happen on the geopolitical front next week, but the prolonged Russia-Ukraine conflict may force investors to stay away from risk-sensitive assets.

A Kremlin spokesperson said on Friday, “The Russian delegation to the Ukraine peace talks expressed their readiness to work much faster than now. “The Ukrainian delegation did not show similar preparation to speed up the negotiations, but these negotiations are ongoing,” he said.

Gold technical outlook and gold sentiment survey

Market analyst Eren Sengezer states that the gold price has broken below the ascending trend line since the beginning of February and has closed the last three days below the 20-day SMA, indicating a bear trend in the technical outlook. Additionally, the Relative Strength Index (RSI) indicator on the daily chart has dropped below 50 for the first time in more than a month, indicating that sellers are beginning to dominate the action of gold. The analyst draws attention to the following levels:

On the downside, $1,920 is aligned as initial support. With a daily close below this level, gold is likely to test the $1,890/$1,900 area before extending the decline to $1,880. If buyers manage to push the gold above $1,950, further resistances could be seen at $1,975 and $1,990.

Despite the bearish trend in the short-term technical outlook, the FXStreet Forecast Survey shows that the yellow metal is likely to rally towards $1,950 next week. The one-month outlook is overwhelmingly bullish with an average target of $1,987.

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