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Gold bounces back, supported by inflationary pressures

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Written by:
Myrsini Giannouli

08 February 2022
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Geopolitical tensions support the price of gold, as investors turn to safe-haven assets. An escalation of the Russia-Ukraine crisis might boost the price of gold, although diplomatic talks are continuing with renewed fervor this week, and if they succeed in de-escalating the crisis, gold price might drop. Geopolitical tensions in the region might also serve to drive the price of other commodities up, especially energy-related assets. The increase in oil price in recent months has been driving inflation up, benefitting gold prices, as the metal is often used as an inflation hedge.

On Monday, Gold traded above the key $1,800 per ounce level, and above the $1,815 per ounce resistance, reaching $1,820 per ounce. If the price of gold continues its ascent, it may find resistance at $1,829 per ounce and further up at $1,853 per ounce, while if the price of gold decreases, support may be found at 1,782 per ounce. 

This week, a number of inflation indicators are scheduled to be released in the US and may affect the price of gold. Inflation indicators are especially important at this time, as they may help traders gauge the Federal Reserve’s fiscal policy in the coming months.

XAUUSD 1hr chart

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Written by:
Myrsini Giannouli

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