Gold price declined on Thursday, retreating to $1,960 per ounce early in the day and climbing slowly to $1,970 per ounce later. If the price of gold decreases, support may be found near $1,893 per ounce and further down at 1,877 per ounce, while resistance may be found at around $2,000 per ounce.
The price of gold has been driven by conflicting market forces over the past weeks. On one hand, gold is supported by intensifying tensions between Russia and Ukraine, as well as by new western sanctions on Russia. On the other hand, the gold price is undermined by increasingly hawkish Fed policy, which boosts the dollar and real yields.
The gold price has been weighed down by the rising dollar and strong US yields. On Thursday, the dollar climbed after a dovish ECB statement caused the Euro to retreat. The dollar has also been supported by increasingly hawkish Fed rhetoric, with FOMC member Mester appearing to be in favor of a 50 base point rate hike on Thursday.
US treasury yields were also boosted on Thursday, with the 10-year treasury yields climbing above 2.8%. Real yields compete directly with gold, which is a non-interest-bearing asset, and their rise puts pressure on the price of gold.
Gold’s safe-haven status supports its price, as reports of violent Russian attacks against Ukraine and new sanctions on Russia drive investors away from riskier assets. On Wednesday, hopes for a resolution of the crisis between Russia and Ukraine were diminished, as Russian President Vladimir Putin announced that diplomatic talks with Ukraine are at a dead end. The conflict in Ukraine has triggered a risk-aversion sentiment, propelling the price of gold to $2,050 per ounce last month.
Sanctions against Russia have been driving commodities up, especially energy-related commodities, contributing to rising inflation. The price of gold benefits from rising inflation, since it is often used as an inflation hedge. The US announced new sanctions last week, targeting Russia’s largest financial institutions to increase economic pressure on Russia. The EU also announced a new round of sanctions targeting Russian banks, and oligarchs and even banned coal imports with an estimated total worth of €4bn a year.
Concerns about the state of the economy in China, after the fresh rise of Covid cases and the lockdown in Shanghai, have also been boosting the price of gold.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Fill in the registration
form and click
Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.
When your live account is approved, you can deposit funds and start trading on your chosen platform!
The website you are now viewing is operated by TopFX, a trade name of Fondex Limited, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.
If you wish to proceed, please confirm that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX or any other entity within the Group.
These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.