Gold Tries To Move Above $1950 As Geopolitical Tensions Increase

Key Insights

• Gold is moving higher after Russia’s decision to receive payments for its gas from “unfriendly” countries in roubles. 
• Higher Treasury yields may put some pressure on gold markets, but traders will likely focus on geopolitical developments. 
• Gold mining stocks could rally if gold manages to settle above the resistance at $1950.

Demand For Gold Stays Strong Amid Geopolitical Uncertainty

Gold settled back above $1935 and made an attempt to settle above the next resistance at $1950 as demand for safe-haven assets continued to increase amid lack of progress in negotiations between Russia and Ukraine.

Russia’s recent decision to receive payments for its gas from “unfriendly” countries in roubles indicated that geopolitical tensions are escalating. It remains to be seen whether European countries will agree to pay in roubles, and it is not clear what will happen in case all consumers refuse to do so. However, it is obvious that uncertainty is increasing and stakes are high, which is bullish for gold.

It should be noted that the recent pullback in Treasury yields provided additional support to gold. Currently, Treasury yields are moving higher, which may put some pressure on gold, although geopolitical developments will likely serve as the main driver for gold markets today.

While gold is trying to get above the resistance at $1950, VanEck Gold Miners ETF could make an attempt to settle above the $39 level today. VanEck Gold Miners ETF has outperformed SPDR Gold Shares ETF this year as gold mining stocks provide leverage to gold prices. In case gold gets back to the upside mode, VanEck Gold Miners ETF will have a good chance to gain strong upside momentum.

Technical Analysis

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

A move above the resistance at $1975 will push gold towards the next resistance at $2000. If gold settles above this level, it will move towards the resistance at $2020.

On the support side, the nearest support level for gold is located at the 20 EMA at $1935. If gold gets back below the 20 EMA, it will head towards the support level, which is located near the recent lows at $1915. A move below this level will open the way to the test of the 50 EMA at $1900.

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