Gold prices catapulted above the $1932/ounce mark on Tuesday as the Russia-Ukraine conflict escalates. The renewed upsurge is in keeping with the estimate of institutional analysts. A strategist at DBS Bank, Benjamin Wong, has indicated that gold prices will remain bullish as long the XAU/USD pair holds above $1,770.
According to Wong, the bank was looking to add on to any dips to $1810 with a potential harvest point at $1,920. He, however, noted that gold prices could dispel any notions of a correction if a sustained push above $1950-$1973 was seen. This outlook reflects the risk-off sentiment that the market presently holds as the conflict rages. Gold prices have added 1.24% as of writing.
Gold prices will also be influenced later in the month when the FOMC meets on 15/16 March to decide the new interest rate direction. It is no longer a question of “if”, but by “how much” the Fed will raise rates. After last month’s inflation and jobs numbers, bets of a 50bps rate hike soared. This could be cemented if Friday’s Non-farm Payrolls trend in a strong direction. Higher interest rates make a case for a shift of investment flows from the non-yielding metal to the higher-yielding safe-haven currency. So apart from the geopolitical factors, traders need to watch the jobs numbers on Friday and the Fed decision to decide which way to place their bets.
The upsurge in gold prices came off a bounce on 1881.68, which took out the 1900.95 resistance and turned that point into a new pivot. This new pivot served as the bounce point for Tuesday’s move, targeting the 13/23 October 2020 tops at 1913.07. 1929.42 is the next destination to the upside.
On the flip side, a corrective decline below 1881.68 is needed to open the door to new destinations down south. 1815.20 and 1789.51 are potential destinations to the south. 1860.77 is one of them, as is the ceiling of the previous resistance zone at 1840.00.
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This post was last modified on Mar 02, 2022, 09:56 GMT 09:56