Contradicting statements from the US and Russia about the Ukraine invasion should continue to support gold price in the coming week and the yellow metal could touch $1,950 also, depending on how the geopolitical situation unfolds, say analysts.
The yellow metal struggled to find acceptance above the $1,900 level and witnessed a pullback after Russia agreed to meet with the US for talks over the Ukraine crisis, alleviating some of the geopolitical fears that had spurred demand for the haven asset.
On Sunday, the gold was trading at $1,897.36 per ounce. In the UAE, the Dubai Gold and Jewellery Group data showed 24K trading at Dh230.0 per gram. While 22K, 21K and 18K were trading at Dh216.0, Dh206.25 and Dh176.75, respectively.
Tensions were high last week as the US increased its warnings about a possible Russian strike on Ukraine, with President Joe Biden suggesting that a "false-flag" operation may be taking place. On the other hand, Russian officials denied that an invasion of Ukraine was underway, and the Russian Ministry of Defense published a video showing a logistical unit returning to its base after the completion of drills.
“The contradicting headlines should keep a lid on any optimistic move in the risk assets and support the safe-haven demand. Besides, inflationary concerns could build up further and benefit the metal if energy prices keep rising due to geopolitical strife. A sustained move above $1,900 would bring the June 2021 peak of the $1,915 level into focus,” says Vijay Valecha, chief investment officer at Century Financial.
“The next bullish target is envisioned at $1,950, the psychological barrier. Meanwhile, if the retracement picks up pace, Tuesday’s high of $1,880 will be put to test below which the $1,850 support area will be back on sellers’ radars. In the UAE, 24k gold price surged to near Dh230 with next resistance seen near Dh232 and support near Dh225,” added Valecha.
Edward Moya, senior market analyst at Oanda, said expectations are growing for some type of ground conflict after separatist leader Denis Pushilin announced an evacuation of Eastern Ukraine residents to Russia and following reports of an explosion in the separatist-held city of Donetsk.
“Gold prices have had quite a February and should find key resistance around the $1,930 level. With Monday being a holiday in the US, that might hold if Ukraine tensions do not escalate further,” added Moya.
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