Gold Steady Near $1,900: Russia-Ukraine in Highlights

Gold prices were closed at $1899.95 after hitting a high of $1916.40 and a low of $1892.90. After rising for two consecutive sessions and reaching its highest level since June, GOLD dropped on Tuesday amid rising US yields. The benchmark US yield for 10-year bonds turned its momentum after four days of decline and reached 1.96% on Tuesday. Rising Treasury yields put even more pressure on gold because they make it more expensive to own the commodity that doesn’t pay interest. The US Dollar Index (DXY), which measures the value of the greenback against a basket of six major currencies, continued its bearish momentum and declined to the 95.84 level.

On Tuesday, during early trading hours, gold was up after Russia recognized two breakaway regions in eastern Ukraine and ordered troops into the regions. In response to this, U.S. President Joe Biden signed an executive order to halt trade and investment between US individuals and the two regions, as well as Russia.

However, during late trading hours on Tuesday, gold started moving in the opposite direction and reversed its course. Rising US Treasury yields put additional pressure on gold, dragging its prices down. The losses were limited due to the inflationary pressures in the economy, which kept supporting gold – a hedge against inflation.

On the data front, at 19:00 GMT, the Housing Price Index surged to 1.2%, against the forecast 1.0%, and supported the U.S. dollar. The S&P/CS Composite-20 HPI increased to 18.6%, up from 18.0% expected, and supported the dollar. At 19:45 GMT, the Flash Manufacturing PMI rose to 57.5, against the expected 5.59, and supported the US dollar. The Flash Services PMI also advanced to 56.7, in comparison to the forecasted 52.9 and supported dollar. At 19:59 GMT, the Richmond Manufacturing Index came in at 1 and fell short of expectations of 10 that weighed on the dollar. At 20:00 GMT, the CB Consumer Confidence surpassed the expectations of 109.0 and came in at 110.5, which also supported the dollar. Most data from the U.S. side on Tuesday were in favor of the dollar, which ultimately added to further losses in yellow metal prices.

Meanwhile, talks about interest rate hikes between Federal Reserve officials also weighed on precious metals. The central bank of the United States is expected to increase interest rates for the first time after the pandemic to support its economy through rising inflation. However, the pace of increasing rates is not decided, which has been a hot topic of discussion lately.

Gold Technical Outlook

Technically, gold hasn’t changed much and is still trading with a bullish bias near $1,900 amid a surge in safe-haven appeal. The daily moving averages (DMAs) have a bullish slope and are located well below the XAU/USD spot price. This, combined with the breach of a nine-month-old downslope resistance trendline, fueled the uptrend, allowing gold bulls to reclaim the $1900 mark.

XAU/USD first resistance would be $1,916. Breaching the latter will expose the January 2021 highs of $1,959, which, if cleared, could pave the way to $2,000. Good luck!