Spot gold was down around 2.5% on Wednesday, as fresh wave of optimism on de-escalating conflict in Ukraine hit the markets and sparked demand for riskier assets, pushing the safe-haven metal in defensive.
Pullback from Tuesday’s peak at $1970, posted after daily advance of nearly 3% and just few dollars away from record high at $2074 (Aug 7 2020) broke below $2000 zone (former resistance reverted to support), signaling further weakness as conditions remain favorable for riskier assets, prompting investors to stronger profit-taking.
Technical studies also work in favor of such scenario, as the price is rapidly losing bullish momentum and stochastic is emerging from overbought territory.
Break below $2000 pivot could extend pullback towards solid supports at $1960/50 zone (Fibo 38.2% of $1780/$2070 / rising 10DMA), which should ideally contain dips and keep larger bulls in play.
Situation over Ukraine is expected to remain metal’s key driver and further calmer tones would maintain fresh risk sentiment and keep gold under pressure.
However, overall situation of high uncertainty remains very supportive for safe-haven gold, with scenario of fresh escalation of the crisis that would neutralize current fragile hopes of stabilizing the situation and probably send yellow metal’s price to new record highs, to be considered.
Res: 2000; 2021; 2049; 2070.
Sup: 1980; 1974; 1959; 1952.
