Gold rose above $1,980 an ounce on April 18, representing the highest price since mid-March. As the war in Ukraine shows no signs of slowing down, the European Union mulling banning Russian gas imports commodity prices have risen, taking gold prices up with them.
With prices elevation of almost everything from energy to food, market participants are piling into gold as a possible hedge against inflation.
The U.S. 10-year Treasury yields moved closer to the 3% territory spurred by the Federal Reserve’s (Fed) signals that they will take a more aggressive approach with interest rates. Whether the Fed will have enough firepower to quell inflation still remains to be seen, which could spur both interest rates and gold prices higher.
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Everything is connected
Besides the U.S. 10-year yield, another important factor that could influence gold prices in the coming weeks is the movement of crude oil prices. Sharp price moves in crude will add to inflationary pressures and possibly underpin gold prices.
Worldwide headlines are dominated by the news surrounding the war in Ukraine as peace seems far away at the moment, it is reasonable to assume that gold as safe heaven will continue to be in play due to these developments.
Technical chart signals
Possibly the first resistance gold price will have to overcome is at $2,000 with the next real resistance coming at the $2,052 which was reached at the beginning of March of this year.
Possibly the low support line with the new move up was created around the $1,800 mark which should not be tested any time soon if inflationary pressures keep on hammering global economies.
Whether a new repricing of gold occurs due to various factors affecting the price remains to be seen. Factors like the war in Ukraine, rising inflation, and rising crude prices are all factors that will increase the price of gold.
Antipattern to the price of gold will possibly be the strength of the dollar, but how far can the dollar increase in the current global environment is questionable. With all of these factors in mind, we could possibly see more upside to the shiny metal price.
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