Gold Price Forecast: Market players rush to safety on imminent Russian invasion

Valeria Bednarik FXStreet

XAU/USD Current price: $1,907.95

Renewed tensions in Eastern Europe spurred demand for safety.
Resurgent demand for the American dollar limits gold’s bullish momentum.
Gold nears its recent multi-month high, next critical resistance at 1,916.50.

Spot gold trades at around $1,908 a troy ounce, up in the American session amid renewed risk aversion. The market’s sentiment took a turn to the worst on news coming from Ukraine as multiple government websites are offline after a DDoS attack blamed on Russia. Additionally, the country declared a State of Emergency starting February 24 for 30 days, warning of a possible Russian invasion within the next 48 hours.

Wall Street turned red after a positive start to the day, while US government bond yields ticked lower, reflecting the increasing demand for safety. On Tuesday, the US government announced sanctions on two of Russia’s largest financial institutions and cut off western financing to the country. Several European leaders announced other sanctions, including Germany halting a pipeline project. However, it is clear that Russia is not intimated by the West.

Gold price short-term technical outlook

The XAU/USD pair nears its multi-month high posted earlier this week at $1,914.10 a troy ounce. The daily chart shows that technical indicators are picking up within overbought levels as the bright metal accelerates above bullish moving averages, all of which reflects increased buying interest.

Technical readings in the 4-hour chart reflect the positive tone of the pair but give no signs of upward momentum, as gold is developing above a mildly bullish 20 SMA, while technical indicators lack directional strength but hold within positive levels. The main resistance level is 1,916.50, where the pair topped on June 2021. The advance seems limited by the prevalent dollar’s demand, although chances are skewed to the upside.

Support levels: 1,887.60 1,877.20 1,865.10

Resistance levels: 1,916.50 1,923.70 1,934.70

View Live Chart for the XAU/USD

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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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