Gold falls ahead of FOMC minutes. Dax struggled with sanctions and inflation in focus.

Gold falls ahead of FOMC minutes

Gold fell 0.5% yesterday and is edging lower again today in a subdued manner.

The precious metal is supported by risk off flows amid more sanctions from the West on Russia and as tensions in eastern Europe remain elevated.

However, treasury yields rising to a multi-year high, the US dollar closing in on a two-year high amid expectations that a more hawkish Fed is pressuring the precious metal.

Fed Governor Leal Brainard hinted towards a quicker pace of rate hikes and a faster pace of the balance sheet run-off to tame surging inflation.

The minutes of the latest Fed meeting will now take center stage, with a hawkish Fed extending the sell-off in Gold.

Where next for Gold prices?

Gold is trading towards the lower end of the range of 1950- 1915, within which it has been mainly trading over the past three weeks.

The bearish MACD suggests that there is more downside to come. A cross below the zero line could accelerate the selloff and see a break below 1915, opening the door to 1903, the March 15 low. A break below here could see the price fall towards 1890, the March low.

On the flip side, any recovery would need to rise above the 20 SMA at 1939 ahead of horizontal support in 1950. A break above here could see 1966, the March 24 high, come into play and create a higher high.

Dax struggles with sanctions, inflation in focus

The Dax is struggling after losses in the previous session and amid elevated tensions in eastern Europe.

The US and the EU will announce further sanctions on Russia for the atrocities being committed in Ukraine by Russia.

The latest round of sanctions will include a ban on new investments and a ban on Russian coal, which sent natural gas prices to a five-month high. Energy security is turning into a massive headache for Europe, particularly Germany.

Energy prices remain in focus as they feed into the inflation story. Eurozone PPI is expected to rise to 31.6% YoY in February and will likely rise further as the Ukraine crisis deepens.

German factory orders dropped -2.2% MoM in February, after rising 2.3% in January, and is much worse than the -0.2% MoM decline forecast.

Where next for the Dax?

After a steep climb higher, the Dax has been consolidating over the past three weeks. The Dax  currently trades caught between the 50 SMA on the upside and the 20 SMA on the downside.

The RSI is neutral, Favoring neither bulls nor bears. A break-out trade could see the buyers wait for a move over the 50 sna at 14560, bringing resistance at 14850 and 14930, the March high, into play. Above here, buyers could bring 15600 into target.

Meanwhile, sellers could look for a sustained move below the 20 SMA at 14350 to test 14200, which offered support on several occasions across late March. A break below here could bring 13800, the February 24 low, into play.