Gold Tests Support At $1975 As Pullback Continues

Key Insights

• Gold moved below the psychologically important $2000 level. 
• Traders will focus on geopolitical news, U.S. inflation data and ECB Interest Rate Decision.
• Global markets remain volatile so traders should be prepared for fast moves.

Gold Remains Under Pressure

Gold is trying to settle below the support level at $1975 as the pullback from the yearly highs continues.

The new round of negotiations between Russia and Ukraine has just begun, but it remains to be seen whether it will bring any breakthroughs. Global markets show mixed dynamics. While gold is under pressure, the safe-haven U.S. dollar is gaining ground against a broad basket of currencies. Meanwhile, S&P 500 futures are moving lower in premarket trading.

In this environment, gold traders will have to focus on the economic data from the U.S. and EU. In the U.S., inflation data for February will have a big impact on markets. In the EU, the ECB Interest Rate Decision and the subsequent commentary will show the trajectory of the monetary policy for the upcoming months.

It should be noted that gold moved from the $1785 level to the $2075 level without any pullback, so the current downside move could be explained by profit taking after the huge rally. Volatility remains elevated, and gold markets will remain sensitive to geopolitical and economic news.

Technical Analysis

Gold is testing the support level at $1975. In case gold manages to settle below this level, it will move towards the next support level at $1950.

A move below the support at $1950 will open the way to the test of the support at the 20 EMA at $1930. In case gold settles below this level, it will head towards the next support at $1915.

On the upside, the previous support level at $2000 will serve as the first resistance level for gold. In case gold moves above this level, it will head towards the next resistance at $2020.

A successful test of the resistance at $2020 will open the way to the test of the resistance at $2050. In case gold settles above $2050, it will head towards the next resistance level, which is located near the recent highs at $2075.

For a look at all of today’s economic events, check out our economic calendar.