Gold Price Forecast: Gold recovers its shine as geopolitical tensions escalate

Valeria Bednarik FXStreet

XAU/USD Current price: $1,863.70

Tensions between Russia and Ukraine boosted demand for safe-haven gold.
Global stocks sunk as speculative interest rushed into safety.
XAU/USD is correcting near-term overbought conditions but retains its bullish stance.

Spot gold trades near a fresh 2022 high of $1,870.97 a troy ounce, as persistent geopolitical tensions between Russia and Ukraine, dominate financial markets, spurring risk aversion. Tensions escalated as Russia deployed troops around Ukraine’s border and demanded the small county not to join NATO nor join other European institutions. The US and other European nations have recommended their citizens to leave the country as they prepare a contra-offensive should Russia invade the country.

Around-the-clock diplomatic talks have been taking place since last week, but there has been no material progress. Investors rushed away from high-yielding assets, and global indexes sunk in the red. Most US indexes trade in negative territory, although the Nasdaq Composite holds on to modest intraday gains.

Meanwhile, the macroeconomic calendar had nothing relevant to offer, exacerbating sentiment-related trading. Government bond yields, in the meantime, ticked lower, although the yield on the US 10-year Treasury note seesaws around 2%.

Gold price short-term technical outlook

The XAU/USD pair retreated from the mentioned high but holds on to intraday gains, maintaining its bullish stance. The daily chart shows that gold keeps advancing above all of its moving averages as the 20 SMA gains traction upward above the longer ones. Technical indicators, in the meantime, remain within positive levels, although with limited upward strength.

The 4-hour chart shows that gold reached overbought conditions but also that bulls retain control. Technical indicators are currently consolidating at extreme levels, while the 20 SMA heads firmly north, far below the current level while above the longer moving averages. The safe-haven metal peaked at $1,877.15 a troy ounce back in October, the immediate resistance level, with a break above the latter exposing the 1,900 threshold.

Support levels: 1,861.60 1,847.10 1,835.30

Resistance levels: 1,877.15 1,887.26 1,900.00

View Live Chart for the XAU/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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