The decline of spot gold is limited, the market is cautiously waiting for the Russia-Ukraine peace talks, and the bulls have another solid backer

On Thursday (March 31), spot gold was under pressure as the dollar rebounded. However, the decline in gold prices is limited, and the market is cautious that the war in Ukraine may enter a new stage of easing, and the supply chain disruption caused by the war is expected to continue to support the charm of gold against inflation.


At GMT+8 19:57, spot gold fell 0.09% to US$1,930.67 per ounce; the main COMEX gold futures contract fell 0.20% to US$1,935.2 per ounce; the US dollar index rose 0.36% to 98.183.

Difficulty progressing in peace talks

At peace talks in Istanbul this week, Russia said it would reduce operations near the capital Kyiv and the northern city of Chernihiv to build confidence. Russia's chief negotiator, Vladimir Medinsky, said on Wednesday that Ukraine had expressed a willingness to meet Russia's core demands,

But Ukraine and its Western allies see Russia's commitment as a means to stem losses and prepare for other attacks. Ukrainian President Volodymyr Zelensky said on Thursday that Ukrainian forces were preparing for a possible new Russian attack in the east of the country. Medinsky also stressed that Russia's position on the Donbas region and Crimea has not changed.

The Kremlin on Wednesday welcomed Kyiv's demands in writing to end the conflict in Ukraine, but said there was no sign of a breakthrough yet. Spokesman Peskov told reporters that Russia had not noticed anything that was really promising or looked like a breakthrough, and said there was still a long way to go.

In view of the fact that the Russian army is preparing to launch a new attack in eastern Ukraine, the market is cautious about the progress of the Russia-Ukraine peace talks.

Inflation expected to continue to soar

Russian President Vladimir Putin has previously said he wants "unfriendly" countries, including EU member states, to pay for gas in rubles, a demand that Western countries have rejected. 40% of the EU's current gas supply comes from Russia.

Russian lawmakers even suggested that Russia could expand demand for ruble payments for other commodities, including oil, grains, fertilizers, coal and metals, raising the risk that a continued surge in commodity prices could lead to a global recession.

In addition to the Ukraine crisis, concerns about high inflation and the ability of major central banks to struggle to control it are weighing on the economy and helping gold perform well, said Brian Lan, managing director of trader GoldSilver Central.

"Gold traders are weighing geopolitical risks and the potential for further inflation to rise, with the prospect of continuing to hold gold as central banks raise interest rates," said Michael McCarthy, chief strategy officer at Australia's Tiger Brokers.

The global status of the dollar is declining

A senior U.S. administration official said India's aggressive increase in oil imports from Russia could put India at "enormous risk" as the U.S. is preparing to ramp up sanctions on Russia.

The European Commission is preparing to impose new sanctions on the Kremlin over Russia's invasion of Ukraine, sources said, possibly as early as next week. The strength of the new sanctions depends on Russia's stance on paying for gas in rubles.

Gita Gopinath, first deputy managing director of the International Monetary Fund (IMF), told the Financial Times (FT) that financial sanctions imposed on Russia have the potential to gradually reduce the dominance of the dollar and could lead to a stronger international monetary system. dispersion.

"The dollar will remain the dominant global currency, but diversification on a smaller level is certainly possible," Gopinath told the Financial Times, adding that some countries were already renegotiating The currency in which they get paid in trade.

Russia's second-largest bank, VTB, has sold a ton of gold to customers this month since Russia scrapped its 20% VAT on personal purchases of gold on March 1 and expects demand to continue to rise. Dmitriy Breytenbikher, the bank's senior vice president, said in a statement that amid "increased uncertainty", investors are buying gold to diversify their portfolios, preserve assets and save for the next generation.

Spot gold at $1958

On the daily line, the price of gold may start an upward ((iii)) wave trend from $1,889, with the upper resistance looking at the 23.6% target at $1,958. Wave ((iii)) is a sub-wave of the up 5 wave that starts at $1779.