Gold’s Bullish Bias Dominates above $1,880: Geopolitical Tensions in Play
Gold’s Bullish Bias Dominates above, Gold price is retreating from fresh eight-month highs of $1,903 reached in the early Asian session, as improved market sentiment reduces the metal’s safe-haven appeal. Investors are; hoping that US President Joe Biden’s meeting with international leaders on a possible Russian invasion of Ukraine will pressure both warring parties to de-escalate the ongoing geopolitical tensions.
On Thursday, the risk was heavily priced into the US’s warnings about an impending Russian incursion; on the Ukrainian border, while the latter continued to deny such plans. Reports of mortar shelling fired by Ukraine’s military and rebels in four war-torn areas of eastern Ukraine’s; Donbas region triggered a risk-off wave that shook markets.
Looking ahead, geopolitical developments in Ukraine will continue to be the primary market driver this Friday, despite a lack of first-tier US macro data.
GOLD prices rose on Thursday, with the metal closing near the day’s; highs of $1,901 at $1,898, up more than 1.54%. Despite the risks of significantly higher real rates in the face of a hawkish central bank regime; the uncertainty surrounding Russia’s NATO crisis over Ukraine appears to be generating solid demand for gold as a safe haven.
Gold’s Bullish Bias Dominates
However, the US dollar index was little changed on Thursday as investors considered ;comments made by NATO allies and officials that sent the market the message about the likelihood of war, following imminent shelling on the Ukrainian front; line. The US dollar traded between 95.71 and 96.10 against a basket of rival currencies (DXY); however, Wall Street stocks were battered, with the S&P 500 down 2.1% to 4,380.26, the Nasdaq Composite down 2.9 percent to 13,716.72, and the Dow Jones Industrial Average down 1.8% to 34,312.03, its lowest level since 2022.
Investors continue to expect a 50 basis point hike at the Federal Reserve’s March meeting. However; money markets were pricing in a 72 percent chance of a 50 basis point rate hike next month, down from an 80 percent chance at the start of the week, likely weighing on the greenback. The 10-year US Treasury note yield fell eight basis points to 1.96 percent.
Gold Technical Outlook
Gold prices fell earlier this week due to RSI divergence and a failure to offer a decisive close above the November 2021 high. However, the metal’s inability; to break through the January month high; of $1,853 during the declines; combined with firmer MACD signals, has redirected gold buyers towards the $1,880 key barrier.
On the daily chart, the price is attempting to break through the longer-term resistance. If the price does not break through the May 2021 highs, the focus will shift back to the $1,880s and lower, keeping the 61.8% golden ratio in mind.
If the quote breaks through the $1,880 resistance; the $1,900 level and late 2021 peak of $1,917 will reappear on the chart. Alternatively, even if gold sellers manage to violate January’s peak around $1,853; an upward trend line from February 3, near $1,840, will act as an extra filter to the south. Good luck!