Pullback may be brief
Gold came within a whisker of record highs on Tuesday and it may not be done there.
The yellow metal is a traditional safe haven and inflation hedge, which makes it perfect in highly uncertain times like this. Not only is the world already desperately trying to get to grips with high inflation, it’s also facing the prospect of an economic slowdown and maybe even recession.
Putin’s decision to invade Ukraine will have severe consequences, not just for Russia – although the sanctions imposed on it will be a hammer blow to the economy – but the rest of the world also, as commodity prices from oil and gas to palladium, nickel, and wheat sky-rocket. No country is insulated.
Gold’s rally has been relentless, gaining more than 16% in a little over a month and it’s hard to know when it will stop. In the absence of a ceasefire in Ukraine and withdrawal of Russian troops, the uncertainty around commodity prices and sanctions could see money continue to pile into it.
We have seen a bit of a pullback since falling just short of the highs and it saw some support around 2,022 (interestingly) around the top of the ascending channel on the 4-hour chart.
A move below here could see 2,000 tested which would be a major psychological test, not to mention the first test of yesterday’s highs. A rebound off here would be a strong breakout confirmation and could propel it higher.
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at firstname.lastname@example.org. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.