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Gold prices have broken above the November 2021 trading high this morning, touching the $1,880 resistance level as a fresh wave of risk-aversion hit markets on the Ukrainian firing reports.
The Russian media agency, Sputnik, has reported that the Ukrainian military forces shot mortars and grenades in four Luhansk People’s Republic, which is internationally recognized to be a part of Ukraine but run by Russian-backed separatists.
Whether this headline turn into something more meaningful remains to be seen, but as things stand safe-haven asset classes have seen a big reversal after Monday’s positive news about Russian forces backing down.
A less hawkish-than-expected January FED meeting’s minutes is also contributing to positive sentiment around gold price. The minutes failed to offer any hints on aggressive and faster FED rate hikes next month
The technical are also very positive for gold, and the recent invalidation of a massive head and shoulders pattern bodes well for continued upside in the yellow metal towards $1,900 and possibly $2,000.
Without a doubt, safe-haven and risk-on assets are currently being driven by geo-politics, so as things stand news traders are having a field-day, as negative and positive sentiment turns on a dime.
Current sentiment metric towards gold show that traders are becoming fairly bearish The ActivTrader market sentiment tool shows that only 36 percent of traders are bullish towards gold.
This low bullish sentiment bias towards gold suggest that gold can still rally, as traders really aren’t that bullish towards the metal, which is typically a great sign for further upside.
Gold short-term Technical Analysis
The short-term technicals for the yellow-metal show that a large head and shoulders pattern has been invalidated, following the recent move above the November 2021 trading high.
Looking at the four-hour price chart, the size of the invalidated price pattern is pointing towards a coming price rally towards the $2,000 level due to its $120.00 price projection.
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Gold Medium-term Technical Analysis
The daily chart shows that gold remains a strong buy while trading above the $1,840 level, after bulls rallied the price above a massive wedge pattern.
If the bullish breakout continues, we could easily see gold price tackling $2,000. If a reversal, and subsequent bearish breakout inside the wedge takes place, we could see $1,800 quickly coming into focus.
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