To read more about the current demand for safe havens amidst global tensions and inflation concerns, check out our latest comprehensive analysis of gold. The price of the precious metal continues to depreciate as the general sentiment improves.
The U.S. President Joe Biden and Russia's Vladimir Putin met today at Geneva, Switzerland, for the first time since the Biden administration took office in Washington. The two sides are trying to dial down global tensions, as relations have been deteriorating over the past few months.
The historic meeting between the two heads of state is expected to ease investors' fears, potentially decreasing the general demand for lower-risk securities. Consequently, gold's downturn is likely to be accelerated.
As can be seen on the hourly chart above, the price of gold is currently consolidating below the 23.6 per cent Fibonacci retracement level at 1858.07, in anticipation of future price depreciation.
These expectations are substantiated by the fact that the consolidation is taking the form of a Bearish Triangle, which is typically taken to represent a downtrend continuation pattern.
In other words, once the price action breaks down below the lower boundary of the triangle decisively, this would allow for the continuation of the broader downtrend. Notice that the lower limit of the structure is converging with the 23.6 per cent Fibonacci, which would make such a breakdown even more prominent.
The price action is also concentrated below the 20-day MA (in red) and the 50-day MA (in green), which is yet another attestation of the prevailing bearish bias. Meanwhile, the MACD indicator manifests waning bullish momentum.
Today's summit is likely to strengthen this bearish pressure as global tensions subside, thereby driving the price of the commodity lower.
The summit between Biden and Putin began in a friendly tone, with Biden calling it a meeting between "two great powers", which many perceive as an indication of goodwill. Putin, in turn, thanked his American colleague for initiating the summit.
The highlight of the discussion would likely be the future of Russian opposition leader Alexei Navalny. Biden had recently threatened Putin that the relationship between their two countries would deteriorate if Navalny were to die in prison.
Nevertheless, the meeting on its own is a good chance for the two sides to reconcile their differences in light of renewed uncertainty. Presently, the relationship between Russia and the U.S. is at its lowest point since the end of the Cold War.