- The demand for the dollar caused a nice pullback in XAU/USD.
- Russia launched a military attack on Ukraine, sparking a global security race.
- XAU/USD trimmed most of its intraday gains but has room to recover.
XAU gold broke above $1,974.40 a troy ounce, a level last seen in September 2020, but has dropped sharply off the level and is currently trading around $1,925 a troy ounce. Market participants gave up on the shiny metal, particularly after Wall Street opened and despite continued panic towards safety. The dollar index spiked to new 2022 highs, being partially responsible for the XAU/USD drop.
US stocks tumbled at the open, with the Dow Jones Industrial Average starting the day more than 800 points lower amid Russia’s decision to end the war. The country launched a military attack on Ukraine earlier in the day and has continued with it despite Western nations announcing sanctions and condemning Moscow’s actions. The latest on the crisis came from Ukrainian President Volodymyr Zelenskyy, who reported that Russian forces entered Chernobyl to seize the nuclear plant.
“Ukrainian Interior Ministry adviser says Russian forces entered Chernobyl and fighting there destroyed a nuclear waste storage facility,” NBC’s Richard Engel tweeted.
XAU Short-Term Technical Outlook
The XAU/USD pair is roughly $55 below its intraday low, but is maintaining modest intraday gains. The daily chart shows that the technical indicators continue to head north, despite being in overbought territory, as the metal trades above all of its moving averages. Among them, the 200 SMA rose above the longer ones, reflecting increased buying interest.
The 4 hour chart shows that the technical indicators have corrected extremely overbought readings, but have also lost their bearish strength within positive levels. Furthermore, the metal has rebounded 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 make new highs near the $2,000 level.
Support Levels: $1,912.00 $1,903.80 $1,887.60
Resistance Levels: $1,940.65 $1,953.80 $1,974.40
