Gold Consolidates Near $1,900 – Russia-Ukraine Tensions in Play

Gold Consolidates Near $1,900

Gold Consolidates Near $1,900, Gold prices closed at $1907.85 after setting a high of $1921.60 and a low of $1892.45. GOLD moved sideways but inclined more towards the bearish side. The yellow metal made gains on the back of growing fears that emerged after the West slapped more sanctions on Russia over its invasion of Ukraine. It also raised fears of supply disruptions and added strength in its prices.

On the other hand, the rising US dollar price kept the safe haven under pressure as the US Dollar Index (DXY) was experiencing heavy buying bets. The DXY reached as high as 97.42 on Tuesday but closed the day at 96.71. The rising strength of the US dollar against rival currencies weighed on gold prices.

Gold is often used as a safe-haven asset during political and financial uncertainty. This month, it has performed well amid the tensions between Russia and Ukraine. Last week, when Russia invaded Ukraine, XAU/USD reached its 18-month highest level at $1973.96 on the back of safe-haven bets. At the increased geopolitical tensions, gold was outperforming cryptocurrencies and other assets due to its safe-haven nature.

Gold Consolidates Near $1,900

After the West increased sanctions on Russia, the Russian Central Bank moved to shield the economy and bolstered other measures. It also promised to resume gold buying in the domestic market to support its economy while the invasion of Ukraine continued. Furthermore, some reports suggested that the sanctions imposed by the US and western countries on Russia were not as severe as expected. They effectively froze over half of the foreign reserves of Russia’s central bank, but there were no sanctions on Russian crude oil or natural gas industries.

On the data front, at 18:30 GMT, the Goods Trade Balance dropped to -107.6B against the projected -99.6B and weighed on the US dollar. The prelim wholesale inventories also fell to 0.8% against the forecast 1.3% and supported the US dollar. At 19:45 GMT, the Chicago PMI fell short of expectations of 62.1 and came in at 56.3; adding weight to the US dollar. The macroeconomic data on Monday was not in favor of the US dollar Monday and limited the declining prices of gold.

Gold Technical Outlook

On a market sentiment swing, gold (XAU/USD) gapped up to a daily high of $1,919.15 before retracing to Monday’s daily pivot point of $1,897.21. Late in the session, the XAU/USD pair approaches the $1,900 level, as market sentiment remains unchanged.

Indicators such as the daily moving averages (DMAs) are located below the spot price, indicating that gold is biased upward. The Relative Strength Index (RSI) is at 63; aiming higher after falling to 60.70 on February 25, confirming the previously stated, and with enough room to surge before reaching overbought conditions.

However, the first resistance for XAU/USD would be a daily high of $1,916.61 on June 1, 2021, followed by a daily high of $1,927.48 on February 28, and then the YTD high of $1,974.48. Good luck!


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