- Easing Ukraine-Russia tensions weighed on XAUUSD demand.
- Gold Price corrected extreme overbought conditions, but bulls defend the downside.
- European indexes trade in the green, supporting Wall Street’s futures.
Gold Price is slowly recovering its shine, battling to recover the $2,000 level. The bright metal plummeted to $1,975.67 a troy ounce ahead of the US opening, following news that Kyiv was ready for a diplomatic solution to the conflict with Moscow. Additionally, Russian President Vladimir Putin and Germany’s Chancellor Olaf Scholz discussed diplomatic options in a phone call. Hopes that the conflict may end in the near term have boosted high-yielding assets, to the detriment of those considered safe-haven such as gold and the dollar. The latter seems to be suffering the most at the time being, which helps to keep the first afloat.
Meanwhile, US indexes hold on to substantial gains, barely retreating from intraday lows. XAUUSD is currently hovering around the 23.6% retracement of its January/March rally and would need to clear the current area to be able to extend gains in the near-term, initially towards $2,025.
The market sentiment began improving on Tuesday as humanitarian corridors to evacuate civilians were put in place. And while the UK and the US announced bans on crude oil imports from Russia, the mood remained upbeat as Ukraine said it would not insist on NATO membership, which triggered some profit-taking on Gold Price.
On Wednesday, the Russian Ministry of Foreign Affairs Sergei Lavrov said that, due to sanctions, Moscow is diminishing its usage of the US currency in reserves and international settlements, which somehow undermines demand for the greenback across the FX board, and prevents Gold Price from falling further. Also, Russia said it’s not trying to overthrow the Ukrainian government, adding to the temporarily positive sentiment.
European stocks traded firmly higher, weighing on the bright metal, which trimmed half of its weekly gains. Gold Price has broken below the $2,000 threshold, as it seems bulls are finally giving up.
Also read: Is it time to top-sell oil and commodities? [Video]
XAUUSD technical outlook
Gold Price is correcting extreme oversold conditions, and there are technical signs that the bullish potential would recede, as the bright metal stands around the 23.6% retracement of this year’s rally at $2,001.00, now providing near-term term resistance. The 38.2% Fibonacci retracement of the same rally is at around $1,955, the ultimate support level, as once below it, the risk will skew to the downside.
A new bout of risk aversion could send XAUUSD above $2,025, the immediate resistance level, which will open the door for a retest of the $2,070 price zone. The record high stands at $2,075.64, a level that the bright metal achieved in August 2020.
