XAU/USD bulls move for the kill

The price of gold fell sharply at the start of the week as the greenback rallied, eradicating demand for the precious metal. The US dollar hit its highest level in more than a week, while yields on two-year Treasury bills jumped. At the time of writing, XAU/USD is 0.2% higher in Asia as the bulls move and the price tries to rally.

The price of gold has risen from a low of $1,921.54 to a high of $1,929.45 so far. Markets remain tied to developments regarding the Ukraine crisis, with mixed headlines overnight. The Financial Times on Monday reported that Russia no longer demands Ukraine be ‘denazified’ in ceasefire talks and will allow kyiv to join the EU if it abandons NATO aspirations. . He went on to say that Moscow and Kyiv will discuss a pause in hostilities during talks in Turkey on Tuesday and that the draft documents do not contain three of Russia’s original core demands – ‘denazification’, ‘demilitarization’ and the legal protection of the Russian language in Turkey. Ukraine, sources told the FT.

That being said, the possibility of a Putin-Zelenskiy meeting is slim. The Kremlin says there has been no progress. Russian Foreign Minister Lavrov said recently that any meeting between Putin and Zelenskiy to exchange views now would be counterproductive. Moreover, a senior US official said Russian President Vladimir Putin did not seem ready to compromise. Ukrainian officials are also playing down the chances of a major breakthrough in the talks.

Meanwhile, US stocks fell early in New York trade as the risks of high inflation and monetary tightening weighed on market sentiment. However, there was a rebound late in the day as big tech names supported the Nasdaq, S&P 500 and Dow. The Dow Jones Industrial Average ended up 0.3%, the S&P 500 gained 0.7% while the Nasdaq Composite gained 1.3%.

On the data side, the Dallas Federal Reserve Monthly Manufacturing Survey for March, a narrower trade gap for February and an increase in inventories. The Dallas Fed’s manufacturing activity index fell to 8.7 in March from 14 in February, contrary to other regional data which pointed to an expansion in the sector.

Additionally, the trade deficit narrowed 0.9% to $106.6 billion in February amid rising exports. Updated trade data for the month will be released on April 5. Finally, wholesale inventories increased by 2.1% in February and retail inventories by 1.1%. Wholesale stocks will be updated on April 8, while retail stocks will be updated on April 14.

Upcoming Key Data

Looking ahead to the week, the US labor market, as well as Eurozone inflation data, will be watched closely. U.S. nonfarm payrolls at the start of the new month on Friday are expected to show employment continued to advance in March after two strong reports averaging +580,000 in January and February, TD Securities analysts argued. .

”That said, we expect some of this momentum to crumble, but at a still-firm job growth pace of +350,000. Indeed, job gains are expected to drive further unemployment rate drops to a post-COVID low of 3.7%. We also expect wage growth to slow to a still firm pace of 0.3% MoM. ”

As for eurozone inflation, analysts expect “headline HICP inflation to spike in the eurozone in March, driven mainly by a sharp rise in oil prices. energy”.

They also expect higher non-energy industrial goods prices to drive core eurozone inflation to 3.2%, its highest in 28 years (mkt: 3.1%). “However, recently adopted energy subsidies and price caps add downside risk to our overall forecast.”

Gold technical analysis

We are in the last week of the month and the start of a new quarter could print a bullish outlook on the monthly chart, as illustrated below:

The month is set could close with a bullish candle and a long wick that represents an accumulation phase on the lower timeframes. This means that there is potential for an upward move in the coming weeks and a new upward cycle thereafter.