The bullion rallied despite the ascent in the greenback across the market
Gold prices surged to one-month highs above $1,980 on Wednesday in a six-day winning streak as geopolitical and inflation concerns helped push the safe-haven metal north from the 20-DMA. Of note, the bullion rallied despite the ascent in the greenback across the market. The USD index registered fresh two-year tops around 100.50 before retreating back below the 100.00 psychological level.
On Thursday, the generally positive risk tone in the equity markets capped the rally, undermining the safe-haven demand for XAUUSD. Investors seem to shrug off inflation worries for the time being, albeit a cautious tone continues to persist as geopolitical developments surrounding Ukraine keep deteriorating.
In the short-term, the downside potential for gold prices seems to be limited as risk aversion could reemerge at any point. Furthermore, rising recession concerns in the United States could cap the dollar’s ascent and thus add to gold demand.
In the immediate term, the XAUUSD pair may derive support from the upcoming ECB meeting due later today. Stocks markets could resume the decline of the central bank expresses a more hawkish tone when commenting on the outlook for its monetary policy. In particular, the bank may hint at a rate hike earlier than expected, citing the elevated inflation in the Eurozone.
In a wider picture, the yellow metal continues to target the $2,000 psychological level last seen more than one month ago. On the downside, the immediate support now arrives at $1,965, followed by a slightly ascending 20-DMA, today at $1,940. As long as the moving average remains intact, near-term bullish risks continue to persist at this stage. The bullion was last seen changing hands around $1,970, down 0.73% on the day.