Gold price drops 2% below $2,000 and equities, bitcoin rally on short-term shift in risk sentiment

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(Kitco News) – A potential cooling in tensions as Russia continues to wage war against Ukraine is helping to improve risk sentiment in financial markets, pushing gold prices off Tuesday’s record highs.

April gold futures are struggling to hold support around $2,000 an ounce as US equity markets and cryptocurrencies push higher ahead of the North American open. April gold futures last traded at $1,998 an ounce, down more than 2% on the day.

At the same time, S&P E-mini futures are up 79 points or 2% ahead of the open. In Cryptocurrencies, Bitcoin has managed to push above $41,000 per token and is up more than 7% on the day.

Another critical sign of shifting sentiment in financial markets, the US dollar is seeing some selling pressure, falling from Tuesday’s 100 level. The US dollar index last traded at 98.38 points, down 0.72% on the day.

According to media reports, sentiment is starting to shift as Ukrainian President Volodymyr Zelenskyy has said that he could be shifting his position on Ukraine’s bid to join NATO. While this could ease tensions, some analysts don’t expect it will be enough to end the conflict in Eastern Europe.

Some analysts have noted that while risk assets are rallying mid-week, it might not be sustainable.

“We continue to believe that any risk rallies should be faded until the prospects for peace emerge. We are not there yet,” said analysts at Brown Brother Harriman.

Other analysts have noted that after Tuesday’s surge to a new intra-day record high, it’s not surprising to see gold prices see some consolidation.

“A noted correction in gold and silver prices this morning is not surprising considering yesterday’s gains,” said commodity analysts at Hightower report. “While we have predicted significant two-sided volatility for the past two weeks, yesterday’s massive trading ranges could signal even more volatility ahead. We see a critical pivot point in April Gold today at the midpoint of yesterday’s range at $2,016. Similarly, we see a key pivot point in May Silver at the midpoint of yesterday’s wide range at $26.37.”

Although gold is seeing some technical selling pressure, many analysts have noted that rising inflation supports higher prices and the current uptrend.

Commodity analysts at Commerzbank bank noted that real 10-year interest rates are back below -1.00%.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/or damages arising from the use of this publication.

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