Choose country & language:

Gold rebounds as the situation in Ukraine remain unstable

Home >  Daily Market Digest >  Gold rebounds as the situation in Ukraine remain unstable

Written by:
Myrsini Giannouli

22 March 2022
Share the article

Gold price remained above the psychological level of $1,900 per ounce on Monday. If the price of gold decreases, support may be found near 1,877 per ounce, while resistance may be found at around $2,000 per ounce. The price of gold is supported by global inflationary pressures, as well as by the conflict in Ukraine.

During the past few weeks, the gold price had climbed up to $2,050 per ounce, its highest level since the peak of the pandemic, in August 2020. The war in Ukraine has triggered a risk-aversion sentiment, driving investors towards safe-haven assets. Diplomatic talks between Russia and Ukraine continue, sparking hopes of a de-escalation of the conflict. Negotiations have entered a more serious phase, as both sides seem to feel there is room for compromise, although so far, a solution does not seem near and gold price benefits from the ongoing crisis.

Sanctions against Russia have been driving commodities up, especially energy-related commodities, contributing towards rising inflation. The price of gold benefits from rising inflation, since it is often used as an inflation hedge. The effect of rising inflation on gold seems to be temporary though. Global inflationary pressures, increased by the war in Ukraine, are pushing major Central Banks towards a more hawkish fiscal policy. 

The Federal Reserve raised its benchmark interest rate by 25 base points last week, bringing its benchmark interest rate to 0.50%. The BOE followed suit a day later, raising its benchmark interest rate by 25 base points, to 0.75%. Treasury yields rose across the US treasury chest last week, as a result of the rise in the Fed’s interest rates. Real yields compete directly with gold, which is a non-interest-bearing asset, and their rise puts pressure on the price of gold.

XAUUSD 1hr chart

TRADE GOLD

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article:

Latest news

Dollar propelled to 20-year high as inflation fears mount

Myrsini Giannouli 13 May 2022

Gold price plummets as dollar strengthens

Myrsini Giannouli 13 May 2022

Oil prices rise as OPEC misses output goal

Myrsini Giannouli 13 May 2022

Crypto markets crash with Bitcoin price hitting a 16-month low

Myrsini Giannouli 13 May 2022

Why TopFX

10-years

10-years

industry presence
as a Liquidity Provider

Spreads

Spreads
from 0.0 pips

and reliable execution

Segregated

Segregated

client funds

First-class

First-class

customer support

Open your Live Account in 3 Steps

Step 1

Fill in the registration
form and click
"Create account".

Step 2

Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.

Step 3

When your live account is approved, you can deposit funds and start trading on your chosen platform!