Gold To Remain Supported By Haven Flows

Gold remains firm in the aftermath of another US strong jobs report issued last Friday. News headlines on war crimes and the potential for more sanctions in the context of East Europe’s tensions are set to keep haven flows strong.

Hawkish Fed backdrop is increasingly weighing on the upside momentum of gold. Aside from geopolitical flare-ups, the focus for the precious metals market this week will shift toward the FOMC minutes and clues surrounding balance-sheet runoff, which we expect will be announced at the May FOMC.

In this sense, while safe-haven appetite and massive ETF inflows provide a strong offset, the drag of a hawkish Fed backdrop is increasingly weighing on the upside momentum of the yellow metal.”

So long as material progress on ceasefire talks and de-escalation remains elusive, haven flows are likely to keep the yellow metal supported.

While geopolitical tensions and yield curve recession signals re-ignite investor interest in gold, downside risks are more prevalent amid a hawkish Fed backdrop and as negotiators continue to work towards a ceasefire.

Gold price continues to remain at the mercy of the dynamics in the US bond market and the developments surrounding the Russia-Ukraine crisis. Gold price has enjoyed good two-way businesses so far this Monday, although the renewed upside lacks follow-through momentum.

Risk sentiment has turned sour as the EU readies more sanctions against Russia, which will buoy the safe-haven US dollar’s demand at gold’s expense.

Further, the hawkish Fed’s outlook-led rally in the US Treasury yields is also likely to keep gold sellers cheerful, in the absence of top-tier economic events.

gold price is testing offers at powerful resistance of the Fibonacci 61.8% one-week at $1,934. If the latter is scaled, then gold bulls will face the next relevant resistance around $1,937.