Gold edges lower amid geopolitical, trade uncertainty

• Gold price edges lower on Friday after surging nearly 2% the previous day after the tragic breakdown in the Russia-Ukraine talks in Turkey. 

• Meanwhile, questions arise about the stability and trustworthiness of the US Dollar.

• After a volatile week, Gold struggles to hold $3,200 on Friday. 

Gold (XAU/USD) price edges lower and struggles to hold near the $3,200 level at the time of writing on Friday as multiple questions and concerns arise in markets and amongst traders. First and foremost, the Ukraine-Russia talks looked to be dead and buried even before Ukrainian President Volodymyr Zelenskyy shook hands with Turkish President Recep Tayyip Erdoğan on the tarmac at Ankara. Russian President Vladimir Putin didn’t attend himself and only sent some low-level diplomats, who were rather seen as Russia taunting and pestering Ukraine.

This spurred several world leaders to lash out at Russia, threatening with more severe sanctions to force President Putin to the negotiation table. Markets are bracing for comments from United States (US) President Donald Trump, who appears to be not amused with the scenery, according to Reuters. 

Meanwhile, the US Dollar (USD) is being challenged by markets, which would be a tailwind for XAU/USD. Volatility “in US risk assets and the dollar will lead more international investors to consider hedging more of their dollar exposure and globally diversifying their asset allocations,” Mark Haefele, chief investment officer for the Swiss bank’s wealth management unit, said this week. “Gold remains an important diversifier,” Bloomberg reports. 

Daily digest market movers: Geopolitical, trade talks, USD to drive Gold’s price 

• Progress on trade negotiations between the US and China has also sapped appetite for haven demand, adding to bearish headwinds for Gold as the standoff between the world’s two largest economies led to a sharp rebound in risk assets this week, Reuters reports. 

• Investors need to diversify and hedge “to increase certainty about the value of their assets, especially when they have non-dollar liabilities coming due,” Mark Haefele, chief investment officer for the Swiss bank’s wealth management unit, said. “There doesn’t need to be a seismic shift in US exceptionalism for these trends to manifest themselves.”, Bloomberg reports. 

• Precious metals sector consolidations are facing some headwinds. A major Chinese Gold producer is scouting for acquisition opportunities worldwide, although the recent price volatility driven by global trade turmoil means it’s not rushing to secure deals, Bloomberg reports.  

Gold Price Technical Analysis: Mixed bag

Headwinds and tailwinds, too many to sum up for Gold, are currently pushing the precious metal all over the place. It is no longer an easy picture, at least for now, and Gold is not one-directional as it was at the start of the year. Ultimately, the ‘last wind standing” will decide which direction Gold will head. Though for now, investors should keep looking at the $3,160 area to assess whether the Gold rally is still viable and intact. 

On the upside, the pivotal technical level at $3,245 (April 1 high) is acting as resistance and could be difficult to reclaim. Once through there, the R1 resistance at $3,280 and the R2 resistance at $3,320 are the following levels to watch, though a major catalyst would be needed to get it there.  

On the other side, the daily Pivot Point stands at $3,199, in line with the $3,200 big figure. In case that level does not hold on Friday, expect a move lower to test the support area around $3,160, with the April 3 high at $3,167 and the intraday S1 support at $ 3,160, before the 55-day Simple Moving Average (SMA) at $3,138.

XAU/USD: Daily Chart