Gold price rose on Tuesday on news of an escalation of war rhetoric in the Russia-Ukraine war. US President Joe Biden’s move to approve Ukraine’s use of US-supplied long-range missiles was met by Russia’s revision of its nuclear doctrine. Spot market gold traded at $2,630 per ounce, having gained 0.7 percent on the daily chart at the time of writing.
Russia’s new nuclear doctrine states that aggression by a non-nuclear state against the nation with the help of a nuclear-armed state will be treated as a joint attack. The move is seen as a deterrence against Ukraine’s use of US-supplied ATACMS missiles, whose 300 km range means 245 Russian military installations, including 15 airbases, are now within Ukraine’s reach.
The geopolitical risk just got a notch higher after Ukraine used the missiles to attack military installations in Russia’s Byansk region on Tuesday morning. While no casualties were reported, the attack raises the prospect of an escalation of the war, which could add tailwinds to gold prices.
Gold has not recorded successive daily gains since Donald Trump won the November 5 US presidential elections. Therefore, Monday’s 1.9 percent gain followed by Tuesday’s continuation of the uptrend underlines the significance of the latest developments in the Russia-Ukraine war.
The Dow Jones Index dropped by more than 300 points in reaction to this development. Also, benchmark 10-year US treasury yields fell by 41 basis points, adding support to gold price. However, Bitcoin’s strong show in the aftermath of the US elections has also added pressure on gold as an inflation hedge.
Gold price pivots at 2,625, and the upside is likely to continue if the price action stays above that point. In that case, the first resistance will likely be at 2,631. However, if the buyers extend their control, it could break above that level and test 2,637.
Conversely, the sellers will be in control if the price moves below 2,625. The downside action is likely to find the first support at 2,620, and a break below that point will invalidate the upside narrative. Also, extended control by the sellers could take the price lower to test 2,615.
This post was last modified on Nov 19, 2024, 15:02 GMT 15:02