Gold Price Forecast: XAUUSD buyers fight back despite the upbeat mood

  • Easing Ukraine-Russia tensions weighed on the 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 accelerated its slump early in the US session and traded as low as $1,975.67 a troy ounce roughly $95 down from Tuesday’s multi-month high. What began as a corrective decline has become some rushed profit-taking after the bright metal rallied sharply in the last couple of days. XAUUSD managed to bounce from the mentioned level, but speculative interest is now eyeing the $1,955.00, the 38.2% retracement of the January/March rally. Meanwhile, the commodity trades at $1,991 a troy ounce.

Meanwhile, US stocks kick-started the day posting substantial gains amid news making the rounds that  Ukrainian President Zelenskyy’s aide said that the country is ready for a diplomatic solution.  The Russian demand for neutrality can be discussed although there must be security guarantees, the aide said, noting that Ukraine is not willing to trade a “single inch” of its territory. 

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 below 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.

Gold Price 4-hour chart

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