• Gold is in wait-and-see mode pre-the release of Fed minutes near $1930, leaving it well within recent ranges.
• Equities are sharply down, but yields are sharply up, sending mixed signals for precious metals markets.
• A hawkish Fed surprise could see XAU/USD retest $1900, but amid ongoing geopolitical nerves, dips may be bought into.

Spot gold (XAU/USD) markets are in wait-and-see mode ahead of the release of Fed minutes at 1900BST later on Wednesday, with prices for now stuck within recent $1915-$1940ish ranges. At current levels around $1930, XAU/USD trades about 0.3% higher on the session, after rebounding from one-week lows printed earlier in the session in the mid-$1910s, with market participants lacking the conviction to push a bearish breakout ahead of upcoming risk events.

A sharp drop in US and European equities is for now offering gold enough safe-haven support to shield it from the negative impact of higher US yields, while the US dollar is flat amid broadly subdued FX markets pre-Fed minutes. Fed speakers in recent days (mostly the comments from Fed Vice Chair Lael Brainard on Tuesday) have pumped the US dollar and US yields higher, adding downside risks to gold, which has a negative correlation to both.

But the increasingly hawkish tone to rhetoric from Fed policymakers as of late sets the bar high for a hawkish surprise out of the upcoming minutes. Whilst a kneejerk move lower to test the 50-Day Moving Average just above the $1900 level, and recent lows in the $1890s just below it, does seem plausible, the tense geopolitical backdrop continues to stimulate safe-haven demand.

Western nations continue to toughen sanctions against Russia as punishment for its invasion of Ukraine, and with evidence of Russia war crimes against Ukrainian civilians piling up, pressure is piling up for more to be done. The EU has taken its first steps to sanction Russian energy imports, on which it is heavily reliant, announcing a ban on coal and signaling it is looking at sanctioning oil.

From the perspective of a gold trader, disruptions to the global supply of key energy resources look set to worsen in the near term rather than improve, increasing risks of stagflation and underpinning demand for assets deemed as providing inflation protection. As a result, traders may continue to view dips back towards $1900 as attractive for the time being.