Gold Price Forecast: Acceptance above $1,917 to unleash further upside, Ukraine in focus

Gold price pauses its bullish momentum just below June 2021 highs of $1,917.
Russia’s move leads to escalation of geopolitical tensions ahead of the G7 meeting.
Overbought daily RSI to test bull cross optimism, a break above $1,917 critical.

Dhwani Mehta FXStreet

Gold remains in a win-win situation, sitting pretty at eight-month highs above $1,900. Geopolitical tensions between the US and Russia escalate over the Ukrainian crisis, boosting the metal’s safe-haven demand. Meanwhile, soaring inflation worldwide bodes well for the inflation-hedge, gold. The United Nations (UN) Security Council held an emergency meeting to discuss the Russian government’s recognition of two separatist regions in eastern Ukraine and its order to deploy Russian troops to them.

With the West condemning a likely invasion from Russia on Ukraine and the US looking to announce a set of sanctions on Moscow this Tuesday, the geopolitical tensions are far from over, as hopes for diplomacy have been thrown out of the window. The risk-sensitive assets, including global stocks and yields have been smashed, which has triggered fresh flows into the safe-havens such as gold, US Treasuries and the dollar.

The US economic releases and Fedspeaks continue to play a second fiddle amid a relatively data-light week and amidst heightening geopolitical risks. Despite the pullback in gold price from multi-month highs of $1,914, the bullish potential remains intact. Markets are likely to seek bargain hunting opportunities in gold on its every corrective attempt, as geopolitical developments will continue to dominate in the balance of the week.

Gold Price Chart - Technical outlook

Gold: Daily chart

Technically, the June 2021 highs of $1,917 remain on bulls’ sights, as a bull cross confirmation is likely to play out.

The 100-Daily Moving Average (DMA) cut the 200-DMA from above on Monday, fuelling the renewed upside in gold price.

However, the overbought conditions on the 14-day Relative Strength Index (RSI) warrant caution for gold buyers.

Any retracement will look for support at the $1,900 threshold, below which the round level of $1,890 could be put to test.

A firm break below the latter will open up the further downside towards Tuesday’s high of $1,880.

The $1,850 support area will be back on sellers’ radars should the correction gather steam.

If the risk-off-driven rally in gold price resumes, then bulls will retest the eight-month tops, above which the June 2021 highs will come into the picture.

The next bullish target is aligned at $1,950, the psychological barrier.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.