Gold prices are showing signs of caution, trading around $2,900 early Tuesday as the market struggles to maintain the momentum from its recent rebound. Buyers remain hesitant amid a broader recovery in the US Dollar, as the market awaits key developments from the upcoming US-Russia talks and upcoming comments from Federal Reserve officials.
Focus Shifts to US-Russia Bilateral Talks
Delegates from the US and Russia are set to meet in Saudi Arabia for discussions aimed at resolving the ongoing war in Ukraine. While the prospect of a peace deal between Russia and Ukraine looms, caution remains, particularly as the meeting may proceed without the participation of Ukraine and European leaders.
Reuters reported that French President Emmanuel Macron hosted an emergency summit on Ukraine following indications from US officials that European leaders would not be involved in the Saudi talks. This uncertainty has contributed to a more subdued risk sentiment, supporting the US Dollar as a safe-haven asset.
US Dollar Gains Amid Fed Officials’ Caution on Inflation
The recent rally in the US Dollar is also bolstered by hawkish remarks from US Federal Reserve officials. Fed Governor Michelle Bowman warned that rising asset prices might be slowing progress on inflation, while Governor Christopher Waller pointed to slow inflation progress and suggested that rate cuts may not be appropriate until 2025 if inflation continues to follow the same pattern as 2024.
Philadelphia Fed President Patrick Harker emphasized that the current economic climate justifies maintaining steady policy for the time being. Investors are closely watching speeches from other Fed officials, including Mary Daly and Michael Barr, for further insight into the central bank’s policy direction ahead of the release of the January meeting minutes.
US-Russia Talks Could Be Market’s Primary Driver
As US traders return to the market after a long weekend, the developments surrounding the US-Russia talks are expected to take center stage. Any potential breakdown in discussions could spur risk aversion, driving renewed demand for safe-haven assets like gold, which could see gains in tandem with the US Dollar.
Gold Price Technical Outlook
Gold prices are holding steady around $2,900 after failing to sustain gains above that level on Monday. The 14-day Relative Strength Index (RSI) has flattened within the bullish zone, currently near 68, indicating a lack of strong momentum.
Should selling pressure intensify, the February low of $2,864 could come into play, with a further downside targeting the psychological level of $2,850. Below that, the 21-day Simple Moving Average (SMA) at $2,830 could provide additional support.
On the upside, if gold buyers regain strength, a test of the record high of $2,943 is possible, with initial resistance at the February 12 high of $2,909. The next significant resistance level is seen around $2,970.
Conclusion
As market participants await developments from the US-Russia talks and key Fed speeches, gold prices are showing tentative movement. While caution prevails, any significant shifts in risk sentiment could drive further volatility, with gold continuing to respond to both geopolitical events and domestic economic signals.