Demand for the greenback triggered a nice pullback in XAU/USD. Russia launched a military attack on Ukraine, triggering a global run for safety. XAU/USD trimmed most of its intraday gains but has room to recover.

Spot gold topped at $1,974.40 a troy ounce a  level that was last seen in September 2020 but retreated sharply from the level and currently trades at around $1,925 a troy ounce. Market players gave up on the bright metal, particularly after Wall Street’s opening and despite the panic run into safety continues. The Dollar Index soared to fresh 2022 highs, being partially responsible for XAU/USD slump.

The XAU/USD pair is roughly $55 down from its intraday low but maintains modest intraday gains. The daily chart shows that technical indicators keep heading north, despite being in overbought territory, as the metal trades above all of its moving averages. Among those, the 20 SMA picked up above the longer ones, reflecting increased buying interest.

The 4-hour chart shows that technical indicators have corrected extreme overbought readings, but also that they lost their bearish strength within positive levels. Even further, the metal has bounced from around a bullish 20 SMA, which currently stands at around 1,912. As long as the 1,900 level holds, the metal has room to resume its advance and reach fresh highs near the $2,000 threshold.

Above the $1965 area, gold lost momentum, and after some stabilization near $1960, XAU/USD corrected quickly to as low as $1912. A break lower could trigger a deeper pullback. The following support stands at $1890.

Support levels:  1.912.00 1,903.80 1,887.60

Resistance levels: 1,940.65 1,953.80 1,974.40

Gold To Face a Sharp Pull Back Before Bullish Continuation

Feb 24 2022