Gold Prices Break Out and are Poised to Rise

Gold prices broke out, surging higher, and the anxiety about geopolitical risks continued. The dollar moved higher on safe-haven flows, while Treasury yields declined as the markets started to price in less of a change of rate hikes in the wake of the Russian Attacks on Ukraine. Markets are concerned about the ability of Fed Chief Jerome Powell to tighten rates. He testifies in front of Congress this week.

Ukrainians are ready to fight, and they are putting up a good defense as the world starts to starve Russia of capital. Germany is poised to send thousands of military equipment and bolster its defense department. For the first time, Russia offered wheat on the open market at a steep discount, but there were no takers of its products.

The Federal Reserve two-day meeting concludes on March 16. Ahead of the meeting, the Fed Chief needs to testify, and the markets will be able to determine if the Fed will increase rates by 25-basis points or even nothing. Construction spending and the ISM manufacturing report released on the U.S. on Tuesday were better than expected.

Technical Analysis

Gold prices broke out to a fresh 8-year high. Prices Support near the 10-day moving average that comes in near $1,902. Resistance is seen near the June highs at 1,916. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal.

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 decelerating, which likely points to a period of consolidation.