Gold prices closed at $1828.15 after setting a high of $1829.90 and a low of $1816.05. GOLD surged higher on Tuesday for the third consecutive session and reached its highest level since January 26. Rising Russia-Ukraine tensions and rising inflation concerns boosted precious metals’ gains, but expectations of a US interest rate hike limited these gains.

Since the beginning of the year, gold prices have been stuck in a range-bound trade due to mixed market sentiment fueled by rising inflation fears and rising expectations for Federal Reserve interest rate hikes.
The US Dollar Index (DXY), which measures the value of the greenback against the basket of six major currencies, found some support on Tuesday and remained green for the day while hovering around the 95.6 level. On the other hand, US Treasury yields on the benchmark 10-year note rose for the fifth consecutive session, reaching a three-year high of 1.98%. Rising yields and the dollar should have caused a drop in gold prices, but the precious metal has continued to rise, owing primarily to bets on its safe-haven status.

The yellow metal was up on Tuesday after Russia-Ukraine tensions remained a hot topic, despite some optimism from French President Emmanuel Macron. On Tuesday, Macron said that President Vladimir Putin had assured him that Russian forces would not ramp up the crisis near Ukraine’s borders. He further said that he had secured an assurance that there would be no deterioration or escalation. However, on the other hand, Russia has said that any suggestion of a guarantee was not right. Although Russia has been denying any plans to invade Ukraine, it has still assembled about 100,000 troops near its borders with Ukraine.

On the data front, at 01:00 GMT, consumer credit dropped to 18.9B against the expected 24.9B and weighed on the US dollar. At 15:56 GMT, the NFIB Small Business Index remained flat at 97.1, as expected. At 18:30 GMT, the trade balance dropped to -80.7B against a projected -83.0B and supported the US dollar. At 19:56 GMT, the IBD/TIPP Economic Optimism fell to 44.0 from the anticipated 47.2 and weighed on the US dollar. Most of the data from the US side was unfavorable, which ultimately added to the rising prices of gold.

Meanwhile, market participants are more focused on the upcoming release of the US Consumer Price Index report for January. The expected figure for CPI in the first month of 2022 is set at 0.4%, which is 0.1% less than the previous month’s reading. Similarly, the core CPI is also expected to decline at the same rate as the CPI. Any higher-than-expected figures from the release could be highly supportive of the US dollar and weigh heavily on precious metals.

Gold (XAU/USD) Technical Outlook

On Wednesday, the technical side of gold remains bullish at $1,828. XAU/USD completes a 61.8 percent Fibonacci retracement at $1,827 and has violated it to go after 50 % Fib level. Gold is currently heading north towards an immediate resistance level of $1,832, and a break above this opens further room for buying until 1,840.

On the lower side, its next support level is at 1,826 and 1,818. Because the MACD is above 0, the chances of a buying trend remain high. So, consider staying bullish if the price crosses above 1,828 and vice versa. Best wishes!