Gold Price Forecast: XAU/USD jumps to the highest level since August 2020, further beyond $2,000

• Gold consolidates recent gains around 19-month high, picking up bids of late.
• 61.8% FE guards immediate upside as Russia, Ukraine struggle over ceasefire, human corridor.
• EU, UK hesitate to support the US in banning Russian oil imports, opt for phase sanctions.
• Gold Price Forecast: XAU/USD needs a sustained move above $2,005 to unleash additional upside

Update: Gold attracted some dip-buying near the $1,980 region on Tuesday and turned positive for the fourth successive day. The momentum pushed spot prices further beyond the key $2,000 psychological mark, or the highest level since August 2020 during the early European session. Investors continue to dump riskier assets amid worries about the potential economic fallout from Russia's invasion of Ukraine. This, along with the growing risk of stagflation, dented the already weaker risk sentiment and provided a fresh lift to the safe-haven precious metal.

Apart from this, the latest leg up could further be attributed to some technical buying amid subdued US dollar price action, which tends to benefit the dollar-denominated commodity. That said, rising US bond yields could act as a headwind for the non-yielding yellow metal and keep a lid on any further gains. Nevertheless, the XAU/USD seems to have confirmed a fresh bullish breakout and is all set to appreciate further. In the absence of any major market-moving US economic data, developments surrounding the Russia-Ukraine saga should produce some short-term trading opportunities.

Previous update: Having failed to cross the short-term key hurdle around $2,000, gold (XAU/USD) prints mild losses near $1,990 heading into Tuesday’s Asian session. That said, the bright metal rose to the highest levels since last seen during late 2020 the previous day before retreating from $2,002.

While the supply-crunch fears remain on the table, keeping the gold buyers hopeful, a deadlock over the ceasefire and human corridor amid the Russia-Ukraine talks seems to probes the gold buyers of late. “Ukrainian officials said a Russian airstrike hit a bread factory in northern Ukraine on Monday, killing at least 13 civilians, while talks between Kyiv and Moscow made little progress towards easing the conflict,” said Reuters.

The news also quotes Russian media while saying, “Moscow would give the residents of the Ukrainian cities of Sumy and Mariupol the choice of moving elsewhere in Ukraine on Tuesday, setting a deadline in the early hours for Kyiv to agree.”

Elsewhere, the European Union (EU) and the UK’s rejection of the US plan to ban Russian oil imports in totality also seem to have favored the market’s latest consolidation.

Against this backdrop, the US 10-year Treasury yields extend the previous day’s rebound from two-month to 1.8%, up five basis points at the latest, whereas S&P 500 and the Euro Stoxx 50 Futures print mild intraday losses at the latest.

Looking forward, a light calendar and deadlock over the key geopolitical issues may keep challenging XAU/USD moves. However, a pause in Moscow’s invasion of Ukraine may extend the commodity’s latest pullback moves.

Technical analysis

Gold prices step back from the 61.8% Fibonacci Expansion (FE) of January-February moves amid overbought RSI conditions.

As a result, XAU/USD sellers remain hopeful to retest the 10-DMA support of $1,937.

However, any further weakness will be challenged by the convergence of the previous resistance line from September 2021 and the monthly ascending trend line, near $1,924.

On the contrary, a clear upside break of the 61.8% FE level surrounding the $2,000 threshold will direct gold buyers towards the $2015-20 area comprising multiple tops marked since July 2020.

Following that, the year 2020 peak near $2,075 and the $2,100 threshold will gain the market’s attention.

Gold: Daily chart

Trend: Pullback expected