Russia-Ukraine negotiations continue, even though a 15-point plan to end hostilities threatens the progress.
The rate-hike by the Fed could not only stop gold buyers, but also make them more competitive.
Gold buyers can be hopeful with the bull cross on MACD and clear bounce off 200 SMA. Weekly resistance breakout keeps them optimistic.
The recovery from the fortnight-low of gold (XAU/USD), is halted as it rounds to $1.925-30 during Thursday’s first Asian session. The market's uncertainty over Ukraine-Russia peace and a reassessment by Fed's hawkish rate hike that didn't appeal to yellow metal traders could explain the yellow metal's recent inaction.
Initial talks between Russia and Ukraine about a diplomatic compromise triggered the risk-on mood at Wednesday's North American session. News reports suggesting a deadlock over the proposed neutrality for Kyiv prompted the alert. The International Court of Justice in The Hague has ordered Russia to stop the invasion of Ukraine. This may create obstacles for any successful negotiations. Recent statements by Volodymyr Zelenskyy, the Ukrainian President, emphasized that he wanted allies to help him control air traffic for Russian military aircrafts.
A softening of the COVID-19 daily counts from China helps to ease virus woes in the dragon nation, and boosts the positive sentiment. The headlines indicating the government's willingness to drive economic growth were also posted by China Vice Premier Liu He.
However, it should be noted that the US Federal Reserve's (Fed), 0.25% rate increase and the expectations of seven additional rate increases during 2022, combined with an upwardly revised inflation forecast, pose a risk-on mood.
Wall Street was a positive place amid all these moves, while the US 10-year Treasury yields reaffirmed their highest levels in 2 years before slipping to 2.172%.
For fresh direction, gold traders will continue to pay close attention to headlines from China or Ukraine.
Analyse technique
To keep investors hopeful, gold prices held onto the previous day’s rebound from 200-SMA as well as the break of the one week-old descending trendline.
The MACD line, which teases a bull crossing over the signal line and RSI that recovers after being oversold, also favors the bullish bias.
However, buyers of gold are currently targeting a 100-SMA level close to $1950. This is just before the support line in February. The previous support line, which was at $1,962 as of press time, will be challenged by the USD upside.
A three-week-old horizontal zone around $1,970-75 is the last line of defense for bulls in a gold price rise above $1,962.
Contrarily, the resistance line that was established in March 08 and 200-SMA (around $1,912 & $1,897 respectively) will be able to challenge gold's short-term weakness.
If the yellow metal drops below $1,897, it is possible that the chances of further decline towards the mid-February peak near $1,880 are high.
