XAUUSD MARKET SIGNAL: Gold Price Forecast: XAUUSD edges higher on geopolitical risks, focus remains on FOMC.



Gold Price Forecast: XAU/USD edges higher on geopolitical risks, focus remains on FOMC

  • Gold attracts some haven flows amid the risk of a further escalation in the Russia-Ukraine conflict.
  • Retreating US bond yields also benefits the non-yielding metal, though the upside remains capped.
  • Aggressive Fed rate hike bets underpin the USD and act as a headwind ahead of the FOMC decision.

XAUUSD MARKET SIGNAL :Gold catches some bids during the early European session and climbs to a fresh daily high, around the $1,676 region, reversing a major part of the previous day’s losses. The uptick is sponsored by reviving demand for safe-haven assets, though strong follow-through US dollar buying continues to cap gains for the XAU/USD.

Against the backdrop of concerns about a deeper global economic downturn, the risk of a further escalation in the Russia-Ukraine conflict drives some haven flows towards gold. In the latest development, Russian President Vladimir Putin announced partial military mobilization and tempers investors’ appetite for riskier assets.

The anti-risk flow is reflected by an intraday pullback in the US Treasury bond yields, which is seen as another factor benefitting the non-yielding gold. That said, expectations that the Fed will stick to its aggressive policy tightening path and raise rates at a faster pace should act as a tailwind for the US bond yields.

XAUUSD MARKET SIGNAL :In fact, the markets seem convinced that the US central bank will deliver another supersized 75 bps rate increase at the end of a two-day policy meeting on Wednesday. This remains supportive of the underlying bullish sentiment surrounding the USD, which might also contribute to keeping a lid on the dollar-denominated gold.

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