News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Gold Price Technical Forecast: The War Bid Takes Over XAU/USD

Gold Price Technical Forecast: The War Bid Takes Over XAU/USD

James Stanley, Senior Strategist

Gold Technical Forecast: Bullish

  • Gold prices hit a fresh eight-month-high this week, driven by the prospect of further tension between Russia and Ukraine.
  • Gold has started to move into overbought territory on the daily chart but that doesn’t mean that the bullish run is finished. It does, however, present an attractive fade scenario should tensions de-escalate, but I’m not expecting that next week and thusly the forecast is being set to bullish.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

Gold has pushed up to a fresh eight month high, getting tangled with a spot of resistance around the 1900 psychological level. And prices on the daily chart have even moved into overbought territory. This could present a compelling fade setup but, that also appears to be one of those backdrops that’s far too clean for comfort, setting a possible bear trap as there’s another factor of importance at play.

After all, if there wasn’t a reason that was pushing bulls towards the bid, that run in Gold prices likely would’ve been faded out by now. It hasn’t, and this indicates that the most pressing matter at the moment for Gold appears to be the prospect of escalated tensions on the Ukrainian border.

I’m not a military analyst nor do I play one on the internet, but even around the turn of the year there were many remarks that if Russia was, in fact, going to push into Ukraine, it would happen after the Olympics. While the two may seem unrelated, it does make sense that Russia wouldn’t want to upset another global superpower with an incursion that would be sure to anger the U.S. and NATO allies. And with the Olympics ending this weekend, it seems an opportune time for tensions to escalate next week.

What is Putin’s end game? There’s a lot of theories but nobody can be certain. It does seem as though a prolonged conflict or a full-on war might not be in his or Russia’s best interests, as the sanctions the country would face could create a difficult economic backdrop. But, despite this threat the envelope has continued to push and there’s no sign yet that Russian aggression is close to abating, keeping the topside of Gold very much in focus.

Gold Weekly Price Chart

Gold weekly price chart

Chart prepared by James Stanley; Gold on Tradingview

Gold Technical Forecast: Bullish

On a shorter-term basis the run in Gold over the past few weeks has been massive, with a 7% jump from the late-January swing-low.

Bulls are currently entangled at the 1900 level of psychological resistance, and that has set a line-in-the-sand. Sellers had a chance to take a swing on Thursday and Friday but that resistance inflection merely led to a higher-low after which bulls forced the bid again. This gives the appearance of greater breakout potential as an overbought market gets even more overbought. This exposes topside resistance potential at 1919 (current yearly high), 1923 (prior all-time-high) and then around 1961.8.

Gold Four-Hour Price Chart

Gold four hour price chart

Chart prepared by James Stanley; Gold on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

DISCLOSURES