Lower In Asia

Gold deals ~$6 lower at typing, printing $1,991.9/oz in very limited Asia-Pac dealing. The precious metal has struggled to make headway above $2,000/oz since backing away from 20-month highs on Tuesday, but operates above the previous week’s range as elevated worry remains re: stagflation and the Russia-Ukraine conflict.

• To recap, bullion initially rose to session highs at $2,009.2/oz on Thursday, following reports that “high-level” talks between the FMs of Russia and Ukraine yielded virtually no progress towards a ceasefire, nor a diplomatic solution to the conflict. The yellow metal however came under pressure later in NY, with the earlier risk-off impulse countered by an uptick in the Dollar (DXY).
• A note that Russian FM Lavrov emphasised Russia’s initial war goals of the “demilitarisation” and “denazification” of Ukraine, upending earlier sentiment that Russian demands had softened.
• Elsewhere, little initial reaction was observed in gold when it came to Thursday’s U.S. CPI print, which produced the fastest rise in 40 years on a Y/Y basis (matching expectations). Focus turns to the FOMC next week (Mar 15-16), with OIS markets re-embedding Fed hike premium for calendar ‘22 over the last 10 days. 25bp of tightening is priced in for the March FOMC, while a cumulative ~160bp of tightening has been priced in through calendar ’22, with the latter returning to pre-Russia-Ukraine conflict levels.
• From a technical perspective, the overall trend for goal remains bullish, with recent pullbacks seen as allowing for overbought conditions to unwind. Support for gold is situated at $1,961.2/oz (Mar 7 low), while resistance is seen at $2,070.4/oz (Mar 8 high).