Gold prices continue to decline as increasing US bond yields outweigh the impact of geopolitical tensions
FUNDAMENTAL OVERVIEW:
- Gold prices draw intraday selling after a brief rise to a one-week high.
- A rebound in US bond yields boosts demand for the USD, putting pressure on XAU/USD.
- However, geopolitical tensions may help curb losses for the safe-haven metal ahead of upcoming comments from the Fed.
Gold prices (XAU/USD) continue their intraday pullback from the $2,642 level, a one-and-a-half-week high reached earlier on Wednesday, and fall to a fresh daily low during the first half of the European session. The US Dollar (USD) sees some dip-buying due to a notable rise in US Treasury bond yields, driven by expectations of a less aggressive approach to policy easing by the Federal Reserve (Fed). This shift is contributing to a move away from the non-yielding gold.
Additionally, a positive risk sentiment further dampens demand for the safe-haven yellow metal, causing gold to reverse its two-day winning streak and stall its recovery from last week’s two-month low. However, the escalating Russia-Ukraine conflict may continue to support gold’s safe-haven appeal, limiting further losses. Traders are also likely to wait for remarks from key FOMC members to gain insights into the future rate-cut trajectory before making new directional trades.
Investors continue to be wary of the potential for further escalation in the geopolitical tensions between Russia and Ukraine, which drove gold prices to their highest level in over a week on Wednesday.
GOLD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Gold is trading within a up channel.
Gold is moving above 20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Neutral trend.
Immediate Resistance level: 2641.82
Immediate support level: 2618.83
HOW TO TRADE GOLD
Following a notable upward trend, gold was unable to sustain momentum and faced a reversal. The price has broken through a major support level and is now attempting a pullback towards a resistance zone. A failure to break above this resistance could lead to renewed downward pressure.