Gold uptrend continues at $1,870: Safe-haven demand in play

So far, gold has remained close to daily resistance in Asia, around $1,870, as markets settle down after an erratic few days, pricing in the prospect of war and intolerable inflationary headwinds. As a result, the US dollar has been torn between expectations for the March Federal Reserve meeting and price volatility in the money and stock markets.

According to NATO allies, Russian military forces are bolstering and not retreating, underpinning safe havens such as gold. However, this geopolitical risk continues to be a key source of uncertainty for commodity traders, which has also driven hoarding behavior, supporting metals demand.

According to the US State Department, more Russian forces, and not fewer, are on Ukraine’s border, and they are moving into combat positions, which is concerning. According to the Estonian Foreign Intelligence Service Chief, Russia is moving approximately ten battle groups to the area near Ukraine, where 100 groups are already deployed. Furthermore, NATO Secretary-General Jens Stoltenberg stated that commercial satellite imagery could confirm Russia’s failure to withdraw.

XAU/USD

During the first Asian session on Thursday, gold XAU/USD prices maintained the previous day’s rebound from a weekly low to around $1,870. As a result, the yellow metal benefits from market uncertainty regarding the de-escalation of Russia-Ukraine tensions and the pace of the Fed’s March rate hike.

Moscow’s softer comments appear to be easing tensions surrounding the invasion of Ukraine. However, the West and some Ukrainian sources oppose the withdrawal of the Russian troops. On the other hand, according to the most recent update from an Estonian diplomat, Russia has moved more military battalions to the area near Ukraine and built a road, and is working on a bridge to soften the transport.

Updates From The US And Their Effect on Gold

The Federal Open Market Committee (FOMC) Minutes, on the other hand, revealed hawkish concerns among board members, despite no strong support for a 0.50 percent rate hike in March. According to the minutes of the most recent policy meeting, “Federal Reserve officials agreed last month that it was time to tighten monetary policy, but that decisions would be based on a meeting-by-meeting analysis of data.”

In terms of data, the latest MoM figures for US Retail Sales and Industrial Production in January were 3.8 percent and 1.4 percent, respectively, exceeding market forecasts and previous readouts.

Amid mixed concerns, Wall Street failed to maintain the previous day’s gains, closing mixed by the end of the day, whereas US 10-year Treasury yields continue to grind higher around multi-day highs, falling 0.5 basis points (bps) to 2.04 percent at the latest. Furthermore, the US Dollar Index (DXY) has fallen for the last two days, resetting the weekly low.

Moving on, gold traders may be interested in second-tier US economic data, specifically housing market numbers, jobless claims, and the Philadelphia Fed…