As with other commodities, gold against the US dollar (XAU/USD) lost a significant amount of value intraday on Mar. 29 before recovering towards the end of the American session.
Both Russia and Ukraine claimed progress in ceasefire talks, which has boosted sentiment in most markets, while participants are increasingly pricing in aggressive monetary tightening from the Fed next quarter.
The majority of participants, around 60%, expect a funds rate of 1.25-1.5% in the USA after the Fed’s meeting on Jun. 15. We’d need to see two successive hikes of half a percent to get there.
That’s a very sudden change in expectations, so you can usually look at gold to decline in such a situation. The possibility is, of course, still there that Russo-Ukrainian talks could collapse, but for gold, the focus seems to be on monetary policy for now.
Although there was a fairly strong bounce from Mar. 29’s intraday low around $1,890. Gold prices approaching this area might suggest losses could lie ahead. A full retracement of gains made since the middle of February could be in the offing.
There is no saturation signal from either Bollinger Bands or the slow stochastic, while the volume remains relatively low. The key area to watch around Friday’s nonfarm payrolls and into early April is the 50 SMA from Bands: a close below this might open the door to a test of the 100 SMA around $1,860.