Gold Price Forecast: XAU/USD holds on bullish grounds near $1,910

Update: Gold is 1% higher towards the electronic close on a day where Russian sanctions are kicking in. ''Russia holds nearly 2300 tonnes of gold worth nearly USD140billion in their FX reserves, representing 22% of FX reserves as of their latest filings from November 2021,'' analysts at TD Securities explained.

''While that estimate is defined as gold in vaults, en route, in allocated and unallocated accounts including those that are held abroad, the Bank of Russia's annual report suggests that precious metals are stored in the territory of the Russian Federation. In turn, this gold could theoretically be used to skirt SWIFT sanctions, but it's not clear how immediately effective this route will be.''

''After all, these sanctions will eliminate location swaps, which will restrict trading with most counterparties. The gold would therefore have to be physically shipped to a destination that would be willing to purchase it, suggesting some form of discount to the war-chest, which blurs the implications for global gold prices.''

Meanwhile, Wall Street ended mixed in volatile trading on Monday. The markets are now in anticipation of the Federal Reserve as well. Atlanta Fed President Raphael Bostic said on Monday that the US Federal Reserve could need to raise interest rates by a half percentage point at its next meeting on March 15 and 16 if economic data between now and then shows high inflation persists. Bostic also said that as of today, he is still in favour of a 25bp move at the March meeting. For the week ahead, Fed Chair Jerome Powell will deliver his regular semi-annual monetary policy update to the US House Financial Services Committee on Wednesday and appear before the Senate Banking Committee on Thursday.

End of update

Gold (XAU/USD) reached a daily high during the Asian Pacific session as the week began. The financial market’s mood worsened over the weekend when the Eurozone, US, UK, Canada, among other countries, imposed stringent sanctions on Ukraine. Russia’s response was fast when President Putin put its military on high nuclear alert. Those factors caused a gap on Monday when the markets opened at $1,919.15. At the time of writing, XAU/USD is trading at $1,903.

The sanctions included the removal of various Russian banks from the important SWIFT financial system. Furthermore, the US Placed sanctions on Russia’s top 10 financial institutions while having frozen assets of the Russian President and Russian ministers. Moreover, a dozen Russian oligarchs with ties with Putin witnessed the same alongside a travel ban.

In the meantime, US Treasury yields keep falling, signaling that the appetite for US Treasuries increased. Contrarily, the US Dollar Index, a gauge of the greenback’s value against a basket of six rivals, advance  0.19%, up at 96.81.

The US economic docket featured Goods Trader Balance for January, which printed a deficit of $107.63 B vs. $100.47 B estimated. At the same time, February’s Chicago and Dallas Fed Manufacturing Indexes came better than expected at 56.3 and 14, respectively.

XAU/USD Price Forecast

Gold (XAU/USD) gapped up and recorded a daily high at $1,919.15 but retraced to Monday’s daily pivot point around the $1,897.21 on a market sentiment swing. Late in the session, XAU/USD approaches the $1,900 mark, as market mood remains unchanged.

Indicators like the daily moving averages (DMAs) reside below the spot price, suggesting that gold is upward biased. The Relative Strength Index (RSI) is at 63, aims higher, after dropping to 60.70 on February 25, confirming the abovementioned, and with enough room to spate, before reaching overbought conditions.

That said, XAU/USD’s first resistance would be June 1, 2021, a daily high at $1,916.61, followed by February 28 daily high at $1,927.48 and then the YTD high at $1,974.48