Gold price has advanced from $1796 above $1970 since the beginning of February 2022, and the current price stands at $1889.
Gold is considered a safe-haven asset, and the uncertainty of potential outcomes between Ukraine and Russia has a positive influence on the price of Gold because investors look for safer places to invest their money.
Gold has weakened from its recent highs, but according to David Meger, director of metals trading at High Ridge Futures, the current fall is very technically motivated. Daniel Briesemann, an analyst from Commerzbank, added:
We think the price drop is premature, there is a risk of further escalation in the conflict, and it could be just a temporary correction. A rebound in the global shares markets also weighed on the safe-haven metal, even as analysts expect market volatility to remain elevated.
The risk premium and safe-haven demand will continue to support this precious metal; still, the upside is limited by the possible rate hike by the U.S. Federal Reserve this March.
The U.S. Federal Reserve is likely to meet market expectations for a 25-basis-point rate hike in March, especially after the U.S. Bureau of Labor Statistics announced that the U.S. consumer price index reached its highest level since February 1982.
Fed Chairman Jerome Powell said that there is more room for further policy tightening without hurting employment, and Morgan Stanley expects the Fed to set a more aggressive tone to fight inflation after the hike in March.
The prospect of interest rate hikes has a positive influence on the U.S. dollar, and the appreciation of the U.S. dollar negatively influences Gold.Technical analysis
Those whose interest is to invest in commodities like Gold should consider the price of this precious metal would advance if the geopolitical situation worsens as investors look for safer places to invest their money.Data source: tradingview.com
Gold has weakened from its recent highs, but if the price jumps again above 1950, it would be a signal to trade Gold, and we have the open way to $2000.
The important support level stands at $1800, and if the price falls below this level, it would be a firm “sell” signal, and the next target could be around $1750.Summary
Gold has weakened from its recent highs, but according to Daniel Briesemann, an analyst from Commerzbank, this could be just a temporary correction. There is a risk of further escalation in the conflict between Ukraine and Russia, and safe-haven demand will continue to support this precious metal.