• The yellow metal is trading on the front foot on Tuesday despite of hawkish Fed.
• Risk-off flows in equities due to geopolitics and China lockdown concerns favor the safe-haven gold.
• US inflation data will the key catalyst ahead.

Gold prices edged higher on Tuesday as appetite for risk weakened ahead of U.S. inflation data despite a decisively hawkish Federal Reserve.

As per strategists at TD Securities report, Gold has continued to churn higher despite a decisively hawkish Federal Reserve. Even the expected more aggressive hikes will not be sufficient to turn interest away from the yellow metal.

Meanwhile the precious metal is benefitted from the demand for safe-haven assets as global equities and other risk assets fall amid ongoing worries about the Russo-Ukraine conflict and lockdowns in China.

There were 26,087 new daily infections reported in the Chinese financial hub Sunday, an all-time high while April 11 reports a similar load of 23,342. Bloomberg reported that ”economists now predict the economy will expand 5% this year, below the official target of around 5.5%. Analysts at Morgan Stanley have cut their growth forecasts this year on the lockdown impact, while Citigroup Inc. has warned of risks to growth in the current quarter.”

Talking about the Russia- Ukraine conflict, Ukraine pleaded for more weapons from the West to help it end the siege of Mariupol and fend off an expected Russian offensive in the east, as more reports emerged of rape and brutality against Ukrainian civilians by Russian forces. Ukrainian President Volodymyr Zelenskiy said in a televised address late on Monday that Russia could resort to chemical weapons as it amassed troops in the eastern Donbas region for a new assault on the port of Mariupol, where thousands are believed to have died under a near-seven week siege.

As a response, Russia’s deputy U.N. ambassador denied the allegations and accused Ukraine and allies of “a clear intention to present Russian soldiers as sadists and rapists.” Russia’s defence ministry said Ukraine’s government was being directed by the United States to sow false evidence of Russian violence against civilians despite what it cast as Moscow’s “unprecedented measures to save civilians.”

Apart from this, US Consumer Price Index will be the main economic data that will help to unveil the health of the global economy. With strong prices for March that reinforces the hawkish outlook at the Fed, this would be potentially supportive of the US dollar and weigh on the yellow metal. However, on the other hand, analysts at Rabobank have warned that the Fed could be hiking into recession.

XAU/USD 4 Hour Chart:

Support:  (S1),  (S2),  (S3).

Resistance:  (R1),  (R2),  (R3).

The risk averse market sentiment favors safe haven precious metal gold. We expect a bullish trend for XAU/USD.