Gold Price Analysis: XAU/USD maintains bullish bias above $2000 amid supportive fundamental/technical backdrop

As the Tuesday US open nears, spot gold (XAU/USD) bulls remain very much in the driving seat, with recent price action very bullish. During early European trade, XAU/USD broke definitively to the north of the $2000 per troy ounce level and, in doing so, rallied above an ascending triangle that had formed over the past few sessions (the ceiling of which was $2000). Spot prices rallied as high as the $2020 mark before pulling back to test the $2000 level once more amid some modest profit-taking. In a sign of just how strong the bullish appetite in precious metals is right now amid the ongoing Ukraine war and global economic fallout, XAU/USD found strong support at the $2000 mark and has subsequently rallied again back into the mid-$2010s.

In other words, the classic technical strategy where traders wait for a breakout beyond a key level and then the subsequent retest to enter their trade (in this case long at $2000) appears to be working out. At current levels just under $2015, spot gold is trading with on-the-day gains of about 0.8%. But there isn’t now much by way of technical resistance to stop spot gold prices charging all the way to a test of August 2020’s record levels in the $2070s. Indeed, amid expectations that rising inflation (as a result of the Ukraine crisis) will push near-term real rates across most of the world lower, various major banks have been falling over themselves to raise their gold forecasts. Goldman Sachs, for example, now sees XAU/USD hitting $2300 in three months and $2500 in six.

In the immediate future, US January JOLTs Job Openings data on Wednesday, US February Consumer Price Inflation on Thursday and US March University of Michigan Consumer Sentiment data on Friday ought not distract much from broader geopolitical themes. Yes, the data is very much likely to reinforce existing narratives about the US economy (high inflation, hot labour market), which will reinforce Fed tightening expectations. But with inflation so high in so many major developed economies and only expected to move higher in the near term, and interest rates still so low (meaning low real rates), gold looks set to remain an attractive investment.