On Wednesday, gold prices regained yesterday’s losses as the U.S. dollar and Treasury yields weakened. The greenback dropped to a more than one-week low. It made the bullion less expensive for investors using rival currencies.
Meanwhile, the benchmark 10-year yields fell from almost three-year highs. It reduced the opportunity cost of the non-yielding metal and lifted its appeal. However, the lack of progress in the Russia-Ukraine peace talks checked gold’s gains.
Spot gold is currently trading at $1,923.81 per ounce as of 0701 GMT.
Russia and Ukraine will resume negotiations on Wednesday. But Ukrainian President Volodymyr Zelenskyy said there was no reason to believe Russia would scale down military operations in Kyiv and Chernihiv. He added that there were positive signals at the negotiation table, but those signals do not stop the explosions of Russian shells in Ukraine.
On the technical front, DailyFX senior strategist Christopher Vecchio suggested that gold prices will end the first quarter on a very shaky technical footing. Earlier today, the bullion set the lowest price this month at $1,890.16 before recovering slightly. But the fundamentals are bearish. The daily Slow Stochastics are moving back to oversold territory, and daily MACD continues to trend lower. Also, gold prices are below the daily 21-EMA envelope, which is in bearish sequential order.
Vecchio mentioned evidence of a potential double top in gold prices, which suggests that the annual highs have been reached. The formation also indicates that more downside is ahead for the yellow metal. He also noted that the IG Client Sentiment Index holds mixed bias in the near term.
FXStreet senior analyst Dhwani Mehta suggested that gold could extend its recovery after having good two-way businesses on Tuesday. She said the focus would be on the release of U.S. economic data. These include the ADP employment and the final 4Q GDP revision. But developments surrounding the Ukraine crisis will continue to be the main drivers of gold prices. Mehta sees immediate support at $1,910 per ounce. On the upside, she sees resistance at $1,931.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, fell 0.25 on Tuesday to 1,091.44 tons.
The Japanese Ministry of Finance announced that Japan would ban shipments of gold to Russia effective April 15. The export control list includes luxury cars, liquor, cosmetics and jewelry. Prime Minister Fumio Kishida pledged to impose further sanctions against the country at the Group of Seven meetings.
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