Gold Price Forecast: Battle lines well-mapped for XAUUSD ahead of key event risks – Confluence Detector

Gold Price consolidates the rebound, not out of the woods yet.

Markets remain risk-averse amid Beijing lockdown fears, Fed rate hikes.

US dollar index closes in on 102.00, holds near two-year highs.

Nothing much has changed fundamentally for Gold Price over the past 24 hours, although bulls are seeing some temporary reprieve. The bearish potential remains intact for XAUUSD, as the US dollar holds near two-year highs vs. its main rivals. Markets remain cautious and prefer to seek refuge in the US currency amid rising worries over the Fed’s aggressive tightening stance and Beijing's covid lockdown, which may temper the global economic recovery. Traders now await the US economic releases for fresh dollar valuations, eventually impacting Gold Price.

Gold Price: Key levels to watch

The Technical Confluences Detector shows that Gold Price is stuck in a narrow range despite the rebound, as the pivot point one-week S1 at $1,906 limits the immediate upside.

If that level is scaled, then bulls need to yield a decisive break above $1,909, the confluence of the Fibonacci 38.2% one-day and the previous high four-hour.

The next stop for XAUUSD bulls is envisioned at the SMA10 four-hour at $1,911. Further up, the convergence of the Fibonacci 61.8% one-day and SMA200 15-minutes at $1,918 will be eyed. 

On the downside, $1,900 acts as powerful support, where the Bollinger Band one-day Lower lies.

Should bears take out that downside cap, then a retest of the daily lows at $1,896 will be inevitable.

The previous day’s low of $1,892 will be next on the sellers’ radars. The line in the sand for Gold buyers is the previous month’s low at $1,890.

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Silver Price Analysis: XAG/USD slumps into mid-$23.00s amid broad commodity sell-off

Silver has slumped towards $23.50 this Monday amid a broader sell-off in risk assets and commodities and as USD strengthens.

Now XAG/USD is below its 200DMA, bears are eyeing an eventual drop towards Q4 2021 lows in the $21.00s.

Spot silver (XAG/USD) prices came under heavy selling pressure on Monday in tandem with a broader downturn in the market’s appetite for risk and downside in other key commodities such as across energy and metals. Traders cited risk aversion relating to the increased risk of lockdowns in China with a Covid-19 outbreak now reported in Beijing, continued pessimism about the prospects for a peace deal in the Russo-Ukraine war and, perhaps most importantly, recent hawkish chatter from central bank policymakers.

Either way, XAG/USD was last trading down nearly 2.5% on the day just above the $23.50 per troy ounce mark, having broken below key resistance in the form of the 200-Day Moving Average at $23.85 and the March lows at $23.97. That means spot silver prices are trading at their lowest since mid-February, prior to the start of Russia’s invasion of Ukraine, with a modest downturn in global yields on the day as a result of risk aversion likely the only thing stopping silver crashing further towards $23.00.

But the bears will be confident in wake of the recent breakout below the 200DMA, with many calling for a drop towards support in the form of the Q4 2021 lows in the $21.00s in the coming weeks as the US dollar continues to rise on hawkish Fed sentiment and risk-off flows. The key risk events for traders to monitor this week include the first estimate of US Q1 GDP growth on Thursday followed by March Core PCE inflation on Friday, with the latter likely to endorse Fed plans/market expectations for a 50 bps rate hike at next week’s meeting.

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Russia's Putin: Kyiv showing not ready to seek mutually acceptable solutions

Russian President Vladimir Putin held a call with European Council President Charles Michel earlier on Friday and, according to Russian news agency Tass (cited by Reuters).

Putin reportedly told Michel that the possibility of him holding direct talks with Ukrainian President Volodymyr Zelenskyy depends on concrete results of talks between the two sides' negotiating teams. Kyiv is showing it is not ready to seek a mutually acceptable solution, Putin told Michel. 

Michel on Wednesday visited Kyiv and pledged that the EU will give a further EUR 1.5B in military aid to Ukraine. 

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EUR/USD Price Analysis: Next target appears at 1.1000

EUR/USD extends the rebound to the 1.0940 region.

A move to the 1.1000 hurdle should not be ruled out.

EUR/USD’s upside momentum picks up extra pace beyond the 1.0900 yardstick on Thursday.

Further advance appears in store for the pair in the very near term with the immediate hurdle now at the psychological 1.0000 barrier. The surpass of the latter should put a test of the 55-day SMA, today at 1.1077, back on the radar.

While below the 200-day SMA, today at 1.1415, the outlook for the pair is expected to remain negative.

EUR/USD daily chart

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Yen to snap record losing streak on intervention worries; euro jumps

The Japanese yen briefly fell to a fresh two-decade low on Wednesday after the Bank of Japan stepped into the market again to defend its ultra-low interest-rate policy, drawing a sharp contrast with the United States where bond yields hit new highs.

But the Japanese unit bounced in London trading as increased nervousness around verbal intervention and growing speculation around an impending bilateral meeting between U.S. Treasury Secretary Yellen and her Japanese counterpart prompted traders to trim some short bets.

Still, positioning in the derivatives and currency futures suggest the yen weakness has more room to run.

The BOJ again offered to buy unlimited amounts of Japanese government bonds to check the rise in Japanese 10-year yields, which were butting against its 0.25% tolerance ceiling.

In contrast, Treasury yields marched to three-year highs while inflation-adjusted bond yields hit positive territory for the first time since March 2020 as hawkish comments by policymakers reinforced expectations of aggressive U.S. interest rate hikes.

The U.S. dollar reached 129.43 yen for the first time since April 2002 in Asian trading before easing to last trade 0.9% lower at 127.82.

"The 130 is a psychological level; if we break it (likely) then momentum will likely drive USDJPY even higher," said Vasileios Gkionakis, EMEA head of FX G10 Strategy at Citibank.

"This is a play on monetary policy divergence with the Fed in tightening mode and the BoJ still easing."

The dollar's rally against the yen has come as U.S. Treasury yields pushed higher, with 10-year yields touching 2.981% for the first time since December 2018 in Tokyo trading. Inflation-adjusted U.S. 10-year yields hit 0% overnight.

"The yen remains the loser of the monetary policy normalisation," Commerzbank (ETR:CBKG) strategists said.

Elsewhere, the euro was the other big gainer in London after media reports that some ECB policymakers were forecasting a first rate hike as early as July. The single currency was up as much as 0.6% at $1.0853.

The dollar index, which measures the currency against six major peers including the yen, early in the day matched Tuesday's high at 101.03 - a level not seen since March 2020 - before easing to 100.38, down 0.6% in the day.

An index of currency market volatility firmed above 8% but still well below 2022 highs of 10% hit in March.

The offshore Chinese currency was the other big loser with the unit declining 0.4% to 6.44 yuan per dollar.

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Gold Price Forecast: XAU/USD remains on the defensive amid faster Fed hike views

A combination of diverging forces failed to provide any impetus to gold on Tuesday.

The Fed’s hawkish outlook, sustained USD buying continued acting as a headwind.

The Ukraine crisis, growth/inflation concerns helped limit the downside for the metal.

Gold witnessed subdued/range-bound price action on Tuesday and remained confined in a narrow trading band, below the $1,980 level through the first half of the European session. Growing market acceptance that the Fed would tighten its monetary policy at a faster pace to curb soaring inflation acted as a headwind for the non-yielding yellow metal. Apart from this, the unstoppable rally in the USD/JPY pair is bolstering the US dollar bid at the expense of the dollar-denominated commodity.

All eyes on the Fed and US dollar

More hawkish comments from Federal Reserve officials have reinforced expectations for faster US policy tightening. They started to flow in from New York Fed President John Williams who said last week that a half-point rate rise next month was "a very reasonable option," in a further sign that even more cautious policymakers are on board with faster monetary tightening.

Meanwhile, Fed member James Bullard spoke on Monday and offered further insight on the outlook for Fed policy. Bullard is one of the bank's most hawkish and has called for interest rates to reach 3.0% this year.

US inflation is "far too high," he said on Monday, repeating his case for increasing interest rates to 3.5% by the end of the year to rein in inflation expectations and slow what are now 40-year-high inflation readings.

"What we need to do right now is get expeditiously to neutral and then go from there," Bullard said at a virtual event held by the Council on Foreign Relations, adding that he doesn't expect to need to raise rates by more than half a percentage point at any meeting.

He said that the Unemployment Rate can continue to fall even with aggressive rate hikes, repeating his view that unemployment, now at 3.6%, will go below 3% this year.

This all comes ahead of the Fed Chair Jerome Powell later this week, where he is expected to solidify expectations for a 50 bps rate hike at the coming Fed policy meeting.

As a consequence of such sentiment, the US rate futures market has priced in a 96% chance of a 50 basis-point tightening at next month's Fed policy meeting, and about 215 basis points in cumulative rate increases in 2022, providing ample support for the dollar.

As for positioning, speculators' net long bets on the US dollar fell for a second straight week, according to calculations by Reuters and US Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position was $13.22 billion for the week ended April 12.

The downside, however, remains cushioned amid the retreat in the US Treasury yields from the multi-year highs. Apart from this, a generally weaker tone around the equity markets was seen as another factor that extended some support to the safe-haven gold. The COVID-19 lockdowns in China, a protracted Russia-Ukraine war, along with a potential European Union (EU) embargo on Russian gas have intensified inflation and growth concerns. This was seen as another factor that benefitted the metal's appeal as a hedge against rising costs. That said,  the sentiment will be driven by the Fed’s expectations amid absent relevant market moving economic releases from the US.

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 Saudi Feb crude exports hit near two-year high

Saudi Arabia's crude exports in February rose to 7.307 million barrels per day (bpd), the highest level since April 2020, official data showed on Monday.

Crude oil exports in February rose 4.4% from about 7 million bpd reported for January.

The world's largest oil exporter's February crude production also rose to its highest level in nearly two years at 10.225 million bpd from 10.145 million bpd in the previous month.

Saudi Arabia's domestic crude refinery throughput fell 0.271 million bpd to 2.506 million bpd in February while direct crude burn fell 111,000 bpd to 291,000 bpd.

Monthly export figures are provided by Riyadh and other members of the Organization of the Petroleum Exporting Countries (OPEC) to the Joint Organizations Data Initiative (JODI), which published them on its website.

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