- Gold extended its rally for two consecutive days and gained 0.60% in the week.
- Heightened tensions in the Ukraine/Russian conflict increased the appetite for the safe-haven metal.
- XAU/USD Technical Outlook: Upward biased, helped by market sentiment. If the conflict escalates, the $2,000 mark is on the cards.
Tensions in the Ukraine/Russia region alongside Russia’s President Vladimir Putin recognizing two separatists Eastern Ukraine regions increased appetite for the safe-haven status of the yellow metal. At the time of writing, Gold is trading at $1,910, and up in the week some 0.60%.
Russia’s recognize Donetsk and Luhansk as independent states
On Monday during the North American session, the two separatist leaders sought recognition by Russia, which they got after a “long” speech of Russian President Vladimir Putin, who put in perspective the history of Ukraine and Russia. That said, Putin urged the Russian Parliament to support the decisions, signing a decree of cooperation and friendship with Donetsk and Luhansk leaders.
Russian President Putin ordered a peacekeeping operation in eastern Ukraine’s two separatist regions while reiterating that the West will impose sanctions anyway, adding that Russia has the right to take retaliatory measures.
Gold’s reaction
The non-yielding metal buyers took advantage of the US holiday observant of President’s day and pushed XAU/USD from $1,896 to $1,914, as war drums in Ukraine do not appear to fade.
West responses to Russian decision
The President of the European Commission said that the recognition of the two separatist territories in Ukraine is a “blatant violation of international law as well as of the Minsk agreements.” She emphasized that the EU will react with sanctions against those involved in this “illegal act.”
Across the pond, US President Joe Biden spoke with Ukraine President Zelensky. Further, US President Biden signed an executive order banning new investment, trade, and financing to the DNR and LNR regions while saying that he would announce additional measures. In the same rhetoric, Poland’s Prime Minister said that Russia’s decision is an act of aggression on Ukraine and said that sanctions should be imposed immediately. Meanwhile, in the UK, Foreign Minister Truss said that the UK would be announcing sanctions on Russia tomorrow in response.
XAU/USD Price Forecast: Technical outlook
Gold is upward biased from a technical perspective. The daily moving averages (DMAs) reside well below XAU/USD spot price, with a bullish slope. That, alongside the break of a nine-month-old downslope resistance trendline, exacerbated the uptrend, helping XAU bulls reclaim the $1900 figure.
XAU/USD first resistance would be $1,916. Breach of the latter will expose January 2021 highs at $1,959, which once cleared could pave the way towards $2,000.