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Gold (XAU/USD) Outlook: Bullion Remains at the Mercy of Russia

Gold (XAU/USD) Outlook: Bullion Remains at the Mercy of Russia

Tammy Da Costa, Analyst
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Gold, US Dollar (USD) Talking Points:

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Ukraine Invasion Remains Probable Boosting Demand for Gold

Gold prices are currently trading sideways as developments in the Russia-Ukraine conflict continues to drive sentiment.

With investors pricing in the increased probability of higher rates being announced throughout 2022, rising geopolitical risks have remained at the forefront of risk appetite, allowing Gold to hold onto gains.

Following the announcement of a potential summit between US president Joe Biden and Russian president Vladimir Putin earlier today, Gold prices retreated from their eight month high, finding support below $1,900.

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However, losses were capped after Russia confirmed that no concrete plans were in place, raising speculation that a Ukraine invasion may still be on the cards.

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Gold Price Analysis

Gold prices are currently trading at critical resistance, formed by the key psychological level of $1,900. After rising above the upper bound of the symmetrical triangle earlier this month, elevated tensions between the Ukraine and Russia have recently overshadowed the probability of rate hikes, supporting demand for Bullion.

After three consecutive weeks of gains, bulls ran into a wall of resistance, at the above-mentioned level which coincides with the 78.6% Fibonacci level of the 2021 move.

While retracement levels from prominent moves continue to provide firm levels of both support and resistance, price action remains above the 20-period MA (moving average) on both the weekly and daily time-frame suggesting that the short-term trend may remain in favor of buyers (at least for now).

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Gold (XAU/USD) Weekly Chart

Chart prepared by Tammy Da Costa using TradingView

Meanwhile on the daily time-frame, the formation of a hanging man candle on Friday and the potential for an evening star formation to develop is indicative of potential deceleration in the momentum of the upward move.

However, for now, the RSI (relative strength index) continues to threaten overbought territory while price action remains encompassed between the confines of a rising channel. A break above $1,900 and past channel resistance could see bulls testing the 23.6% Fibonacci of the historical move at $1,925 handle, giving rise to a probable retest of 2021 highs at around the $1,960 mark.

Gold (XAU/USD) Daily Chart

Chart prepared by Tammy Da Costa using TradingView

Gold (XAU/USD) Sentiment

Gold: Retail trader data shows 63.06% of traders are net-long with the ratio of traders long to short at 1.71 to 1. The number of traders net-long is 7.27% higher than yesterday and 2.04% higher from last week, while the number of traders net-short is 0.23% higher than yesterday and 29.63% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.

Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias.

Gold Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -1% -2% -1%
Weekly 5% -1% 3%
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--- Written by Tammy Da Costa, Analyst for

Contact and follow Tammy on Twitter: @Tams707

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.