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Gold Consolidates Gains As Dollar Strength Tempers Rally

GOLD
  • Gold prices have been consolidating on Thursday as markets assess the impact of rising yields versus the obvious economic risks from Russia’s invasion of Ukraine, which are underpinning haven demand for the yellow metal.
  • “Gold is a bystander today with the negative impact of Powell’s statement on rates, growth and inflation being more or less offset by the continued conflict focus and general strength across the whole commodity sector,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. (BBG)
  • It is worth noting that broad dollar strength continues to be a headwind for gold. The USD index came within close proximity of the 98.00 mark earlier today and this marked a 21-month high for the index.
  • Additionally, existing holders appear to be selling into rallies, according to Adrian Ash, head of research at brokerage BullionVault. “This is not a one-way street. There is clearly a lot of selling pressure in the physical market,” he said. “The price is being capped.”
  • With that said, the technical outlook appears supportive with price remaining above key short-term support at the Feb 24 low of $1878.4 low. A sustained break above the top of the bull channel, which intersects at $1942.6, would reinforce bullish conditions and pave the way for strength towards the Feb 24 high of $1974.3.
  • Indeed, markets will also be playing close attention to tomorrow’s US employment report where consensus is for another strong report including rapid wage growth and falling unemployment as participation remains steady, whilst hours worked are expected to bounce after taking most of the Omicron hit last month.
Energy BulletsCommodities
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