Gold Price Analysis: XAU/USD momentum eases for now after stop run sends prices above $1840

Spot gold (XAU/USD)’s upside momentum has waned in recent trade, with prices trading in more of a subdued manner near $1842 after bursting above resistance in the low $1830s and then subsequently $1840 for the first time in over two months. The speed of spot gold’s latest advances, especially between the $1830 to $1840 area, is suggestive of a stop run. With market participants amping up hawkish Fed bets in recent weeks, a theme that has weighed heavily on certain parts of the US equity market and sent real and nominal yields surging to multi-month/year highs, many were likely betting on weaker gold prices. Many traders short gold may have had their stop loss sat somewhere in the $1830s.

It is unlikely that spot gold can resist the advances of the US dollar and US real yields forever, and expectations for a very hawkish Fed in 2022 suggest continued upside risks for both. But gold is for now garnering safe-haven demand as geopolitical tensions surrounding Ukraine amp up, market commentators said. US Secretary of State Antony Blinken warned earlier in the day that Russia could attack Ukraine at very short and there are fears this could have a highly inflationary impact on the global economy via higher energy prices. Russia is a key gas supplier to Europe and a key global exporter of crude oil. With WTI at multi-year highs in the upper $80s and further energy price gains likely, investors may be buying gold as an inflation hedge.