Gold: scenario for the week
By Sergey Ruban
A new round of tension in Ukraine has pushed the metal quote up.
Last Thursday, the news about the Malaysian Airlines passenger plane falling in the area of armed conflict near the Russia and Ukraine border hit the wires. Earlier, the US introduced new sanctions against Russia. Investors reacted sharply to these reports which show that the tensions in Eastern Europe haven’t abated. This spurred gold buying, as gold is traditionally considered to be a safe haven against geopolitical risks.
Meanwhile, the data from the US has been conflicting. On the one hand, there was a labor market improvement and the manufacturing activity growth in Philadelphia. On the other hand, there was some deterioration in the housing market, particularly in the construction sector. As a result, the data couldn’t prevent the increase in gold price, which also received support from the lower US stock indices.
However, geopolitical tensions will unlikely have a lasting impact on the price. The focus will continue to be on the prospects of the Fed’s monetary policy and US economy. While the US is maintaining stable and positive economic dynamics, gold is unlikely to show a steady growth due to the odds of the earlier rate hikes in the United States.
Technically, gold’s prospects will remain positive as long as it is above the strong support at $1280.00-$1300.00. We expect an increase above the current maximum to the direction of resistance at6 1345.00, 1392.00 and 1433.00. Only at the break and the consolidation below 1280.00 will bring the pair to support around 1240.00 and 1200.00.