Gold Price Forecast: XAU/USD declines amid hopes of and end to the war in Ukraine – Commerzbank.

The yellow metal is under pressure. XAU/USD has dropped to $1,925 – its lowest level since early March. The hopes of a ceasefire and an end in the near future to the war in Ukraine are causing precious metals prices to fall sharply, economists at Commerzbank report. 

End to the war would substantially reduce the risk of Palladium supply outages.“The hopes of an end to hostilities are also increasing the risk appetite of market participants. This can be seen clearly from the steep rise in bond yields. This raises the opportunity costs of holding gold, which does not yield any interest. In real terms, however, that is to say after deducting inflation expectations, interest rates are still significantly negative, which should preclude any more pronounced price slide.”

“Russia is the world’s second-largest palladium producer after South Africa and accounts for just shy of 40% of the mining supply. An end to the war would thus substantially reduce the risk of supply outages. Furthermore, according to its biggest shareholder, Russia’s largest palladium producer has apparently found new transport routes for its palladium shipments following the closure of air space.”

EUR/USD steadies near 1.1000 despite weak EU data.EUR/USD clings to daily gains near 1.1000 despite the disappointing data releases from the euro area. Eurostat reported on Monday that Industrial Production in the eurozone contracted by 1.3% on a yearly basis in January and the ZEW Economic Sentiment plunged to -38.7 in March from 48.6 in January. Eyes on US data, ECB President Lagarde’s speech.

EUR/USD News 

GBP/USD rises above 1.3050 on broad dollar weakness.GBP/USD extended its rebound from 1.3000 on Tuesday and advanced above 1.3050, supported by the selling pressure surrounding the greenback. The US Dollar Index is losing more than 0.3% on the day as investors remain hopeful for a Russia-Ukraine peace agreement.

GBP/USD News 

Gold keeps March lows of $1,902 and the Fed in focus.Gold price remains vulnerable despite a brief pause in its three-day downtrend amid a sharp pullback in the US Treasury yields, which has dragged the dollar lower alongside. The price action in the dollar and yields is a pre-Fed repositioning by the market participants.

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