Gold Continues to Rally on Safe Haven Flows

• Gold prices continued to rise on Geopolitical risk
• The dollar surged higher and continued to receive a safe-haven bid.
• U.S. yields moved higher, rebounding as inflation expectations surge

Geopolitical risks continue to buoy the yellow metal. The U.S. Congress agreed that they would pass a resolution that the U.S. would not trade Russian goods. This scenario includes oil. Market volatility remains elevated, ahead of the Fed, which is a week from this Wednesday, where expectations are tightening rates by 25-basis points.

Higher commodity prices that are exported from Russia are receiving a bid. Oil and Wheat prices along with platinum, are gaining traction. The U.S. might ban Russian oil imports, accounting for 500-600 thousand barrels a day. That is approximately 3% of the total consumed daily. The United States is now working with Iran and Venezuela to help increase output.

Technical Analysis

Gold prices broke out and closed at the highest level since August 2020. Resistance is seen near the August highs at 2,002. Support near the 10-day moving average that comes in near $1,927. Short-term momentum is positive as the fast stochastic generated a crossover buy signal.

Prices are overbought. The RSI is printing a reading of 75, above the overbought trigger level of 70, which foreshadows a correction.

The medium-term momentum is positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is upward sloping, which likely points to upward prices.