Gold Price Forecast: XAU/USD pokes key hurdle around $1,915, geopolitics, US PMI eyed

Gold (XAU/USD) prices grind higher, after refreshing the eight-month top near $1,914 during the late Asian session on Tuesday. The bullion buyers have been cheering the rush to risk-safety since late January, mainly due to inflation fears and geopolitical concerns surrounding Russia and Ukraine.

Recently fueling the quote were headlines backing the previous Western warnings over the Russian invasion of Ukraine. Market sentiment roiled after Russian President Vladimir Putin ordered troops inside Eastern Ukrainian states, citing peacemaking efforts. Previously, Russian President Putin declared Donetsk and Luhansk in Eastern Ukraine as independent states and signed a decree "on friendship and cooperation".

In a reaction to the sudden jump in geopolitical fears, the United Nations (UN) called an emergency meeting. During the meet, Secretary-General for Political Affairs, Rosemary A. DiCarlo, said that she regrets the order to deploy Russian troops into eastern Ukraine on a reported 'peacekeeping mission'.

Elsewhere, the UK, the US and Canada showed readiness to announce fresh economic sanctions on Moscow. Further, Japan's Yomiuri mentioned Japan’s warning to stop the chip exports to Moscow if it invades Ukraine whereas Australia PM Scott Morrison said that they will be in lockstep with allies on sanctions on Russia.

On the contrary, Russia’s UN Envoy said, “Allowing 'a new bloodbath in the Donbas is something we do not intend to do.'” On the same line were comments from China’s UN Ambassador who said, “All parties concerned must exercise restraint, avoid any action that might fuel tensions.”

Against this backdrop, S&P 500 Futures dropped over 1.80% whereas the US 10-year Treasury yields declined seven basis points (bps) to 1.85% by the press time.

In addition to the Russia-linked risk-off mood, recently softer Fedspeak also allowed gold prices to remain firmer. On Monday, Federal Reserve Board Governor Michelle Bowman followed the tunes of Chicago Fed President Charles Evans and New York Federal Reserve Bank President John Williams while saying, “It is too soon to tell if the Fed should hike 25 or 50bps in March.”

That said, the risk catalysts are crucial for short-term gold moves while the preliminary US PMIs for February will also be important to watch amid the recent softening of Fedspeak.

Read: US Markit PMIs Preview: Services sector has room for upside surprise, boosting the dollar

Technical analysis

Gold seesaws around the fresh eight-month high as bulls flirt with the $1,910-15 region, following a sober Monday that tested the previous three-week uptrend.

The yellow metal crossed the key horizontal hurdle surrounding $1,877 and extended the run-up beyond an upward sloping resistance line from January 20, now support around $1887 during the last week.

Gold: Four-hour chart

However, overbought RSI and a descending trend line from September 2020, around $1,914 by the press time, challenges the quote’s further upside.

In a case where the bullion prices rise past-$1,914, the year 2021 high surrounding $1,960 will be on the gold buyer’s radar.

Meanwhile, pullback moves may initially aim for the resistance-turned-support line around $1,887 before testing the aforementioned horizontal support close to $1,877.

Adding to the downside filter is a 12-day-long rising trend line close to $1,865.

Overall, gold prices may witness a pullback before rallying further. Though, buyers should remain hopeful beyond $1,865.

Gold: Daily chart

Trend: Pullback expected