Anasayfa Blog Market Analysis Weekly Market Analysis / 7 March - 11 March 2022

Weekly Market Analysis / 7 March - 11 March 2022

by AgaBullion
Weekly Market Analysis /  7 March - 11 March 2022

Gold risks a correction before next upswing kicks in above $2,000

Gold buyers keep reins around August 2020 levels, posted the biggest weekly jump since July 2021 at the latest.

However, pullback moves remain elusive until the quote defies the last week’s triangle breakout, by declining below the previous resistance line of $1,928.Ahead of that, February’s peak of $1,967 may also challenge the XAU/USD pullback.

In a case where gold prices drop below $1,928, the $1,900 threshold and an ascending support line from late January near $1,890 will test bears before giving them controls. Also acting as a downside filter is the 200-SMA level of $1,860. Following that, the August 2020 peak near $2,077 will be in focus.

Fundamental Overview

Gold trimmed a part of its intraday gains to the highest level since August 2020 and was last seen trading just above the $1,980 level, still up over 1% for the day. The worsening situation in Ukraine continued weighing on investors' sentiment.The latest developments provided a goodish lift to the safe-haven XAU/USD, though bulls struggled to push spot prices beyond the $2,000 psychological mark.

The fundamental backdrop remains tilted firmly in favour of bullish traders and supports prospects for further gains. Hence, any meaningful pullback might still be seen as a buying opportunity and is more likely to remain limited amid absent relevant market moving economic releases.

Lastweek

Despite recently easing from the $2,000 threshold, gold (XAU/USD) prices remain on the front foot around a 19-month high as traders seek risk-safety amid the ongoing Russia-Ukraine jitters. That said, the quote eases to $1,988, up 1.0% on a day, while heading into Monday’s European session. Bloomberg said that the US weighs acting without allies on the ban of Russian oil imports.

While portraying the risk-off mood, S&P 500 Futures drop 1.30% whereas the US 10-year Treasury yields fall 2.5 basis points (bps) to 1.69% to portray the heavy risk-off mood. It’s worth noting that Russia’s stand as the world’s third-biggest oil producer adds to the global supply crunch and strengthens commodities additionally.

Short term Outlook

As a result, gold buyers are likely to keep reins but the pullback moves can’t be ruled out should this week’s US inflation figures favor the faster Fed rate-hikes. That said, the US Nonfarm Payrolls (NFP) rose by 678K, well above the median forecast of a 400K figure and upwardly revised 484K prior during February. On the same line, the Unemployment Rate dropped to 3.8% versus 4.0% previous readings and 3.9% expected during the aforementioned month. Following the data release, Chicago Fed President and FOMC member Charles Evans mentioned, per Reuters, “The US central bank is on track to raising rates this year, though it may be ‘more than I think is essential to do so at every policy-setting meeting.”

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