Gold Price Forecast: XAU/USD bulls take charge towards critical resistance, eyes on Ukraine risks

• Gold is moving in on a critical area of resistance on the daily charts. 
• The focus is on Ukraine and Russian peace talks after the Fed failed to deliver any hawkish surprises. 

The Gold price is firming despite the undeniably hawkish Federal Open Market Committee, with the Fed's dot plot suggesting that the committee is looking to overshoot the neutral rate by the end of 2023. Nevertheless, the US dollar fell on Wednesday considering that there were no tougher surprises that might have added to the greenback's weeks-long momentum.

The dollar index (DXY), which had gained 3% since the start of the Russia-Ukraine war on Feb. 24 and 10% since May, fell as much as 0.6% on Wednesday. On Thursday, the price has fallen by almost 0.8% as traders parse the Fed's chairman's less hawkish statements from the press conference:

• “We do anticipate inflation will move back down. It may take longer than we’d like.”
• “I guess I would say the expectation still is that inflation will come down in the second half of this year, but we still expect inflation to be high this year.”
• We expect inflation to remain high through the middle of the year, begin to come down, then begin to come down more sharply next year.”

The bar for a hawkish surprise at the Fed was high and given how much was priced in, the US dollar has failed to hold up vs the cautious optimism in peace talks. 

Ukraine and Russian peace talk optimism, albeit arguably somewhat misplaced, has been playing into the moves which are set to remain the primary driver. Consequently, the euro has benefitted from this also which is a primary driver in the forex space currently, offering a lifeline to the gold bugs that have managed to bust through $1,927 on Thursday as Wednesday's closing price.

Ukraine / Russian peace talk progress, or lack thereof

The hopes of a possible peace deal are faint but are alive. The Financial Times published a ‘15-point plan’ that was allegedly close to being agreed upon that included Ukraine being a neutral state like Switzerland or Austria and having security guarantees from the US, UK, and Turkey.

However, as analysts at Rabobank said, ''this was then almost immediately rejected by Ukraine. Indeed, a spokesperson said that plan reflected only the Russian position.'' Moreover, the analysts highlighted troubling tones and rhetoric from Russia's president, Vladimir Putin, who gave a national speech.

''He claimed Russia was ‘being cancelled’ and spoke of “fifth columns”  and “national traitors” who “cannot do without oysters, foie gras, and gender freedoms,” who “by their very nature are located exactly there, not here, not with our people, not with Russia. This is, in their opinion, a sign of belonging to a higher caste, a higher race. Such people are ready to sell their own mother… The collective West is trying to split our society, speculating on the combat losses, on the socio-economic sanctions… and there is only one goal… the destruction of Russia. But I am convinced that… the Russian people will be able to distinguish true patriots from scum and traitors and simply spit them out like a midge that accidentally flew into their mouths. Spit them out on the pavement. I am convinced that such a natural and necessary self-purification of society will only strengthen our country, our solidarity, cohesion, and readiness to respond to any challenges.”''

''Does this sound like a man looking to deescalate, or one who is going to double down to get better terms?,'' Rabobank questioned, pointing to darker days to come for both the ruble, financial markets and world peace in general. 

In trade today, a western official said there's a very big gap between the two nation's positions. The official also said those who have seen Putin's remarks would be forgiven for thinking he is not in a mood for compromise.

''Although both sides have pointed to limited progress in peace talks this week, Putin showed little sign of relenting during a televised speech in which he inveighed against "traitors and scum" at home who helped the West, and said the Russian people would spit them out like gnats,'' Reuters reported. 

Gold technical analysis

In the pre-Fed analysis on Wednesday, Gold Price Forecast: XAU/USD stalls just ahead of $1,900, driven by Ukraine crisis ahead of the Fed, it was explained that Gold was meeting a support area on the daily chart and was due for a correction from within.

It stated, ''there is room for a continuation to 24 Feb. lows $1,878, but as it stands, a 50% mean reversion from here could be on the cards, targeting the neckline of the M-formation at around $1,960/70.''

Gold live market, daily chart

As illustrated, the price has indeed moved in toward the aforementioned resistance area and according to the prior analysis, there is from for further mitigation of the imbalance of price where the counter trendline meets the prior lows near a 50% mean reversion around $1,960. Should this area of resistance hold, then bears could be attracted by the discount which could equate to a test of $1,880 which is the last defence for a downside continuation.