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Price of gold holds firm despite volatility

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Analysis by Golden FX Link Capital business manager Chhea Chhayheng.

Price of gold holds firm despite volatility

Gold prices are trading slightly higher than $1,920 on an intraday basis, with all industry players’ eyes on the Russia-Ukraine war.

Russian president Vladimir Putin’s insistence that “unfriendly” nations pay in roubles for natural gas is just the beginning of a Russian export policy that could see fewer US dollars being used in transactions for goods, especially for energy.

The US dollar index, meanwhile, has reclaimed 99.00 on the backdrop of Tuesday’s good US Services PMI,

in contrast to the preliminary estimate of the market indicator at 58 – up from 56.5.

Interest rate hikes have accelerated following the positive US unemployment rate, with the level at 3.6 per cent.

The Federal Reserve is expected to raise interest rates by 50 basis points. Backed by a strong labour market and full employment, an aggressively tight monetary policy is expected in May.

US Treasury yields are balanced within a narrow range. The benchmark 10-year US Treasury yield is now hovering at 2.4 per cent, with higher levels expected in the future.

This increase in value has also pressured the price of gold.

Technically, the precious yellow metal is moving in a box market ranging between $1,900 to $1,965 per ounce.

The price may continue to consolidate if it tests the $1,900 mark.

Therefore, investors should consider buying gold at a key support of $1,900. However, the price of $1,965 is still the key resistance for the sell position if gold prices test the higher point in the range.

So the sell position is recommended in the range of $1,960 to $1,965, setting a stop-loss function at $1,975 and a take-profit at $1,930.

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