As the Ukraine crisis intensifies, all hopes of a quick cease-fire are lost.
Bulls in XAU/USD are watching the month-end close to see if there is any chance of a continuation next year.
The gold price stands at $1,933.54, which is 0.72% more than the previous day. XAU/USD has been fluctuating between a low $1,916.01 to a high of $1,938.62 so far. The softer US dollar has supported gold prices and raised doubts about the possibility that there will be a ceasefire between Russia, Ukraine.
The DXY (US dollar) dropped 0.6% to a near two-week low, despite Russia and Ukraine's peace talks deteriorating. The gold prices dropped as high as 1.8% on Tuesday when Russia promised to reduce military operations in Kyiv and northern Ukraine. However, the precious metal managed to pare most of the losses and settled just 0.2% less for the day.
Ukraine crisis escalates
The Kremlin welcomed Wednesday's Kyiv's written demands for an end of the conflict in Ukraine. However, the Kremlin stated that there had been no breakthrough. Ramzan Kadyrov is the powerful head of Russia's republic in Chechnya. He stated that Moscow would not make any concessions in its war against Ukraine. Vladimir Medinsky, the Kremlin negotiator, had misunderstood. Aljazeera tweeted that a Polish Deputy Prime Minister stated that Russia was preparing for another attack on Ukraine.
After hours of peace talks between both sides, Russian forces attacked the outskirts Kyiv on Wednesday. The US administration had on Tuesday warned that they were skeptical of Russia's promise to end its military aggression on Ukraine.
Trades will closely monitor the situation to see if any progress can be made following yesterday's talks. Mykhailo Podolyak, Ukraine's presidential advisor, stated that the talks had been'successful enough to allow for a meeting between Putin or Zelensky''. Podolyak said that documents were being prepared to allow the presidents to meet on a bi-lateral basis ,.''.
The curve of the US 2-year/10 year Treasury yield curve has been closely monitored by markets, which briefly inverted Tuesday. Markets are now watching for signs of a recession by closely monitoring the curve in bond markets.
Analysts at TD Securities stated that "haven flows remain strong, so the risk of buyers being forced into offloading in a vacuum along with potential CTA liquidations has decreased for now." Key downside CTA triggers are located in the $1870/oz area.
Analysts added that gold traders will have to deal with macro outflows as a result of a Fed that is hawkish. Rate markets are eager for the Fed's surprise. "Despite geopolitical tensions, yield curve recession signals, and re-igniting investor interest in gold, downside risk still exist amid a hawkish Fed backdrop, and as negotiators work towards a ceasefire."
Technical analysis for gold
A bullish candle could close the month with a long wick. This represents a phase in accumulation on the shorter time frames. There is potential for a move higher in the weeks ahead, and then a new cycle high.
