Gold Trades Choppy at $1,920 – Geopolitical Tensions in Highlights
Gold (XAU/USD) prices traded near $1,920, up 0.10 percent intraday, during Monday's Asian session, after seeing the largest weekly decrease
Gold (XAU/USD) prices traded near $1,920, up 0.10 percent intraday, during Monday’s Asian session, after seeing the largest weekly decrease since June 2021. Before the new pause, the yellow metal had initially hailed the recent escalation of Ukraine-Russia tensions and fresh economic anxieties from China.
Ukraine’s Deputy Prime Minister Iryna Vereshchuk rejected Russia’s demand that Mariupol be surrendered, adding to the risk-aversion. The rising number of Covid cases in China and the suspension of trading in Hong Kong by the troubled real estate business Evergrande are also weighing on market confidence.
It’s worth recalling that the Houthis assaulted Saudi oil plants over the weekend, and the US responded by sending Patriot missiles to Saudi Arabia after receiving an urgent request from the Middle East.
Stock futures have paused a four-day advance, and US Treasury yields have also pared recent losses, while the US Dollar Index (DXY) has struggled to stay above 98.00 at the latest.
The risk-off environment may aid GOLD prices in recouping recent losses, although the DXY’s rebound may pose a challenge to the bullish trend.
NATO members and US President Joe Biden Summit
On Monday, gold found considerable bids amid anxiety over the summit outcome between NATO members and US President Joe Biden in Brussels, which is scheduled for Thursday. The meeting’s agenda includes taking additional attempts to achieve a ceasefire in the Russia-Ukraine conflict. The meeting’s outcome could result in more penalties against Moscow. US President Joe Biden will attend the European Union (EU) summit on the same day.
The uncertainty surrounding the Biden-NATO meeting will keep market participants on edge, and a stronger risk-on impulse may be put on hold until the conclusion of the meeting.
The recent discussion between Biden and XI on Russia’s invasion of Ukraine concluded with the confirmation of no financial aid from China to Russia, which could help it to mitigate the impact of recent Western sanctions. The main focus remained on the Russia-Ukraine conflict, and both countries favored a diplomatic solution. Aside from that, Biden cautioned Beijing that providing material help to Moscow would result in “consequences.”
Meanwhile, the US dollar index (DXY) began flat on Monday ahead of Federal Reserve (Fed) Governor Jerome Powell’s address on Wednesday. The speech may offer new insights into the current economic situation and potential monetary action.
Gold Technical Outlook
The gold price has challenged the $1,950 barrier and is now going south, attacking firm support at $1,929. That level is the point at which the Fibonacci 23.6 percent one-month and the preceding low four-hour connect. Gold bears’ next stop is likely to be $1,926 which is extended by the pivot point. Further south, the previous day’s low of $1,923 will resurface. A prolonged decline below the latter will exacerbate a rapid sell-off towards the next support level of $1,912.
Alternatively, the $1,937 immediate upside obstacle will be tested if the bulls recover control. The next substantial resistance is seen at the Fibonacci 38.2 percent one-day of $1,940, above which the Fibonacci 23.6 percent one-day at $1,945 will be tested. If the resumed uptrend gains traction, gold investors will look to challenge the previous day’s high of $1,950. Good luck!
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