High yield US T-bond yields and a risk-on market mood weighed on the nonyielding metal.
XAU/USD Technical Outlook – Downward biased. A bearish harami candle pattern pattern looms.
Gold (XAU/USD is set to end the week with losses after reaching a daily high at $1974.48 on Thursday.|After reaching $1974.48 on Thursday, the daily high of $1974.48 for gold (XAU/USD) will end the week in losses.} Breaking News Russia is open to talking with the Ukrainian Government. This would lead to a greater appetite for riskier assets to the detriment save-haven assets like precious metals or low yielder currencies. According to him, XAU/USD is still trading below $1900 and was $1892 as of the writing.
The fragility of the market sentiment was evident during a busy week on the global financial markets. According to reports, the attacks on Kyiv, Ukraine’s capital, have increased in recent weeks. The Ukrainian Ambassador to the US Markarove said that Russia’s attack against Ukraine was more brutal. Kyiv’s mayor claimed that blasts were heard within minutes close to a power plant in Kyiv.
Despite all the above, the market mood remains positive as demonstrated by US equity trading in green, likely on month-end flows. The greenback is at 96.68 and falls 0.50%. However, the US Treasury yields have weighed on non-yielding metals, with the 10-year note at 1.988% up 1.5 bps.
XAU/USD rallied to a one and a half-year high of $1,974.48 on Thursday, but has fallen since then, failing to hold onto the $1900 mark. It is worth noting that investors know that the Russian Central Bank holds some gold reserves and booked profits before reaching the $2,000 mark, in fear that President Putin might use those to support Russia’s ruble.
The US economic docket had earlier reported macroeconomic data. The January Durable Good Orders exceeded expectations by rising 1.6% m/m. However, the Fed’s preferred measure of inflation, PCE annually, broke the threshold of 6%. However, Fed odds of raising rates at the March meeting are higher. The UoM Consumer Sentiment for February was above the 60.0 threshold but fell behind January readings.
Gold Price Outlook: XAU/USD
The XAU/USD price action for the week saw a $100 move on Thursday as Russia/Ukraine tensions escalated. The candle that burned on Thursday left a large wick above its real body, which indicated intense selling pressure above $1,909. This, along with Friday’s price action confirms a bearish Harami pattern. It would be validated once XAU/USD breaks $1,878.09 resistance.
XAU/USD would find its first support at the $1,878.09 daily low on February 24, 2019. The breach of this would expose the 9-month-old support/resistance trendline at $1,850-55. After that, a test of $1,829.76’s 50-day moving average (DMA).
