Gold had been trading sideways since last summer, as the global economy kept expanding, but at the same time inflation kept surging, forcing central banks to start tightening their monetary policy. But, with the geopolitical tensions in Ukraine intensifying this month, the sentiment deteriorated, and a weak sentiment benefits safe havens in such times.

Inflation has surged further, especially after the US sanctions on oil and other goods from Russia. The EU, China and other major importers have decided to keep importing oil and gas from Russia, which has left the US on its own, but the jump in prices is now a fact, which is a positive thing for safe havens once again.

Gold Daily Chart Analysis – The Hype Has Worn Off

The 20 SMA is keeping gold down

As a result, gold surged above $2,000, reaching $2,070 earlier this month, but the sentiment started improving, and gold retreated under $2,000 again. The XAU/USD fell to $1,895, but it has bounced back up, although the 20 SMA (gray) has been acting as resistance on the daily chart, preventing buyers from pushing any higher. In the meantime, Moscow says that the Russia-Ukraine talks are still in progress, which is a positive factor for the sentiment, and a negative one for gold.

The latest remarks on the situation from the Kremlin

Yesterday, we also heard Jerome Powell say that they might hike rates by more than 0.25% if need be. After these comments, the US dollar was higher yesterday, as the implied odds of a 50 basis-point hike are currently at 60% for the May 4 meeting, compared to the previous 52%.

FED Chairman Powell’s Comments Yesterday

• If we need to hike beyond 25 bps, we will
• There is an obvious need to move expeditiously to a more neutral level and more restrictive levels if needed, to restore price stability
• Action on balance sheet could come as soon as May meeting but no decision has been made
• Ukraine war may have significant effects on the world economy but the magnitude and persistence is highly uncertain
• Fed’s policy actions will help bring inflation down, near 2%, over the next three years
• History provides grounds for optimism that the Fed can achieve a soft landing
• Fed projections can become outdated quickly at times like these, with events developing rapidly
• We are headed once again into more covid-related supply disruptions from China

Gold XAU Crude Oil Live Chart

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