- Spot gold is consolidating in the $1850-60 area after hitting fresh multi-month highs last Friday on geopolitical tensions.
- As concern about a potential Russian incursion into Ukraine mounts, risks seem tilted to the upside for gold.
- Technical developments also lean bullish after XAU/USD broke above a long-term pennant last week.
Having hit multi-month highs in the $1860s last Friday amid rising geopolitical concerns (as Russian military action against Ukraine, perhaps as soon this week, looks ever more likely) spot gold (XAU/USD) prices have been stabilising in an $1850-60 range. Russia/Ukraine/NATO tensions will be the main driver of market sentiment this week, meaning gold traders will be closely keeping an eye on meetings between Russian and Western politicians over the next two days. The most important of these meetings is a visit by German Chancellor Olaf Scholz to Kiev on Monday and then to Moscow on Tuesday. With US press suggesting that Russian could launch an assault as soon as the middle of the week, and Western leaders warning a Russian attack could come at any time, this meeting may be the last-ditch attempt to prevent war.
Recent news that, in a meeting with Russian President Vladimir Putin, Russian Foreign Minister Sergey Lavrov recommended sticking with the diplomatic path for now, saw gold prices chop within intra-day ranges and did not result in lasting downside. That suggests that risks remain tilted to the upside this week. In the event that diplomacy fails and war does break out, an associated safe-haven bid could easily send XAU/USD towards November’s highs in the $1870s, with a break above that opening the door to a run at the $1900 level. Importantly for the gold bulls, recent technical developments also suggest a bullish bias. Looking at XAU/USD over the past year and a bit, the pair formed a long-term pennant structure. Last Friday, it appeared to break to the upside of this structure, suggesting an extension of upside in the near term.
Aside from geopolitical risks, gold traders will also be keeping an eye on US economic and Federal Reserve developments. January Producer Price Inflation figures are scheduled for release on Tuesday ahead of January Retail Sales and the release of the accounts from the January Fed meeting on Wednesday. Regional Fed Manufacturing surveys for the month of February and a barrage of Fed speak, starting with outspoken hawk James Bullard at 1330GMT on CNBC on Monday, will also be worth keeping an eye on.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0550 as dollar rebounds
EUR/USD has lost its traction in the American session and retreated to the 1.0550 area. In the absence of high-tier macroeconomic data releases, the dollar is staging a rebound with the US Dollar Index rising above 103.00 and forcing the pair to edge lower.
GBP/USD consolidates its weekly gains below 1.2500
GBP/USD has extended its sideways grind below 1.2500 into the second half of the day on Friday with the dollar staying resilient against its rivals. Nevertheless, the pair remains on track to snap a four-week losing streak.
Gold loses traction, drops below $1,840
Gold came under modest bearish pressure in the American session on Friday and dropped below $1,840. The benchmark 10-year US Treasury bond yield stays quiet above 2.8%, helping XAU/USD limit its losses ahead of the weekend.
Bitcoin price will bounce to $36,000, but what happens next will leave you shocked
A brief technical and on-chain analysis on Bitcoin price. Here, analysts evaluate where BTC could be heading next. Does the possibility for a cat bounce make sense?
PANW shows bullish reversal chart pattern after earnings beat
PANW stock benefits from continued strong revenue growth. Palo Alto Networks now nearly services half of the Global 2000. PANW stock is showing a bullish reversal pattern on its daily chart.