February 17, 2022 15:17:52
Safe haven assets are in demand again today as headline havoc hits our screens in full effect. The Ukraine crisis is front and centre as the market driver with the threat of an “imminent” invasion pushing gold up to eight-month highs. The yen is also outperforming in the currency space with USD/JPY dropping below 115 while investors are seeking the safety of government bonds.
Markets have whipsawed over the past week, as volatility fuelled by expectations of central bank tightening to tame soaring inflation have sharpened reactions about developments in Ukraine. Oil is nearing $100 while at the same time it is hurting global growth which may potentially reduce the number of future rate hikes.
A tepid dollar and general nervousness have pushed gold up over 1.2% on the session. Clearly, the weekend will be a nervous time for investors with conflicting headlines and an obvious desire to safeguard risk portfolios.
Gold looks to $1913 if it holds $1877
The precious metal has risen nine days in the last twelve as the geopolitical tensions have ratcheted up. Prices paused at the November high at $1877 before breaking through this level today. The weekly close will be important to see whether bugs can hold above this support mark.
The daily RSI is nearing overbought territory and prices are touching the upper Keltner band, with the MACD momentum indicator firmly in the green. Some consolidation above $1877 should see buyers aim for the next major resistance into $1915 where the market topped into last spring. This is also near the major retracement (61.8%) of the selloff from the 2020 highs of 2075. Any more peaceful headlines may see a quick retracement with $1834 next major support.
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