The US Federal Reserve will increase rates aggressively in the coming months.
Update:Gold seesaws to a three-month high (XAU/USD), bringing it up to $1,870. This is as traders search for new clues in a slow Asian session on Tuesday.
The market’s rush to risk-safety amid geopolitical fear and escalating talk about Fed actions in March prompted the yellow metal to re-establish its multi-day high.
The traders seem to have been distracted by headlines about US-China trade tension, which seems to have dragged them away from recent risk catalysts like the Russia-Ukraine invasion and Fedspeak.
The mood is reflected in the US Treasury yields, which have lost the gains of the previous day. However, the stock Futures and Asia-Pacific equities traded mixed late.
The calendar will feature the US Producer Price Index (PPI), January, and the Empire State Manufacturing Index February. However, the main focus will be on the risk catalysts listed above to provide clear direction.
End of the update.
On Monday, the price of gold rose to its highest level since November 16, despite growing concerns about Russia-Ukraine tensions and despite James Bullard, President of the St. Louis Federal Reserve, calling for more rapid US Federal Reserve interest rates increases. XAU/USD increased its gains by $1,874 in New York’s afternoon session on Monday.
Markets are on alert due to the increasing threat of an attack from Russia. Volodymyr Zelenskiy, President of Ukraine, urged Ukrainians not to fly their flags from buildings or sing the national anthem unison on February 16, which some Western media have suggested as the likely start of a Russian invasion.
The comments were taken to mean that the president of Ukraine was officially informed Wednesday would be the date of the attack. This caused a temporary drop in market volatility, but officials from Ukraine said Zelenskiy wasn’t predicting an attack on Wednesday but was instead reacting with scepticism towards foreign media reports. Washington had stated that Russia could invade Ukraine “anyday now” and Boris Johnson, the British Prime Minister, said Monday that the situation was “very, very hazardous.”
Antonio Guterres, Secretary General of the United Nations, said that he is deeply concerned by “increased speculations” about a military conflict. He has asked world leaders to increase diplomacy in order to calm the situation.
Technical analysis for gold
According to the week ahead forecast, gold, The Chart of Week: $1880’s were identified as the last defense for continued upside.
Prior analysis: Gold, daily chart
The price should normally correct at this point, but the ATR for the weekly chart stands at $46.00. It is still early in the week. The rally in gold has been $23.00 thus far. There is still some room for more.
