Gold Price Forecast: Gold recovers its shine as geopolitical tensions escalate

Valeria Bednarik FXStreet

XAU/USD Current price: $1,863.70

Tensions between Russia and Ukraine boosted demand for safe-haven gold.
Global stocks sunk as speculative interest rushed into safety.
XAU/USD is correcting near-term overbought conditions but retains its bullish stance.

Spot gold trades near a fresh 2022 high of $1,870.97 a troy ounce, as persistent geopolitical tensions between Russia and Ukraine, dominate financial markets, spurring risk aversion. Tensions escalated as Russia deployed troops around Ukraine’s border and demanded the small county not to join NATO nor join other European institutions. The US and other European nations have recommended their citizens to leave the country as they prepare a contra-offensive should Russia invade the country.

Around-the-clock diplomatic talks have been taking place since last week, but there has been no material progress. Investors rushed away from high-yielding assets, and global indexes sunk in the red. Most US indexes trade in negative territory, although the Nasdaq Composite holds on to modest intraday gains.

Meanwhile, the macroeconomic calendar had nothing relevant to offer, exacerbating sentiment-related trading. Government bond yields, in the meantime, ticked lower, although the yield on the US 10-year Treasury note seesaws around 2%.

Gold price short-term technical outlook

The XAU/USD pair retreated from the mentioned high but holds on to intraday gains, maintaining its bullish stance. The daily chart shows that gold keeps advancing above all of its moving averages as the 20 SMA gains traction upward above the longer ones. Technical indicators, in the meantime, remain within positive levels, although with limited upward strength.

The 4-hour chart shows that gold reached overbought conditions but also that bulls retain control. Technical indicators are currently consolidating at extreme levels, while the 20 SMA heads firmly north, far below the current level while above the longer moving averages. The safe-haven metal peaked at $1,877.15 a troy ounce back in October, the immediate resistance level, with a break above the latter exposing the 1,900 threshold.

Support levels: 1,861.60 1,847.10 1,835.30

Resistance levels: 1,877.15 1,887.26 1,900.00

View Live Chart for the XAU/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD accelerates losses, focus is on 1.1800

EUR/USD’s selling pressure is gathering pace now, opening the door to a potential test of the key 1.1800 region sooner rather than later. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and the publication of the FOMC Minutes later in the day.

GBP/USD turns negative near 1.3540

GBP/USD reverses its initial upside momentum and is now adding to previous declines, revisiting at the same time the 1.3540 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs just above the key $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.