Ukraine and Venezuela’s efforts to tame the respective geopolitical tensions with Russia and the US have recently improved market sentiment. As a result, the metal’s safe-haven demand gets a dent, which in turn triggered the latest pullback in XAU/USD prices.
Gold buyers take a breather around $2,042, down 0.40% intraday during Wednesday’s Asian session. In doing so, the yellow metal struggles to extend the previous four-day uptrend while staying around the highest levels last seen during August 2020.
Key Areas we need to consider:
On the contrary, Russia may not cheer Kyiv’s intention to dump NATO membership goal as Moscow may fear the enemy to join the European Union (EU), which in turn demolishes President Vladimir Putin’s unsaid target of putting Kremlin-controlled leader in Ukraine. Recently, Russia called for nationalizing foreign-owned factories that shut operations, which in turn raised doubt on the market’s optimism.
Talking about data, the US trade deficit rallied to a record high and the small business confidence, as signaled by IBD/TIPP Economic Optimism gauge for March, dropped to the lowest in 13 months. Further, China’s Consumer Price Index (CPI) rose past 0.8% forecast to reprint 0.9% prior figures while the Producer Price Index (PPI) crossed 8.7% market consensus with 8.8% YoY figures, versus 9.1% previous readouts.
While portraying the mood, the US 10-year Treasury yields drop two basis points (bps) to 1.85% whereas the S&P 500 Futures rise 0.40% on a day at the latest.
To sum up, the recently mixed geopolitical concerns may challenge gold buyers but concerning over stagflation, due to the latest rally in commodity prices and economic fears because of that, could keep XAU/USD buyers hopeful.