Gold Price Forecast: XAU/USD eyes $1,970 as risk aversion theme gains its mojo back

• Gold prices look set to reclaim $1,970.00 as the Russia-Ukraine war intensifies.
• The Russian military surrounding the north of Kyiv had stretched longer to 40 miles.
• The negotiations for a ceasefire between Russia and Ukraine will resume later this week.

Gold (XAU/USD) drives higher towards $1,950 after juggling in a range of $1,878.10-1,927.48 as investors return to safe-haven assets. The headlines of negotiations between Russia and Ukraine on Monday had increased the risk-appetite of investors as a firmer truce initiative between the nations was highly expected. However, the unavailability of any material outcome turned investors’ interest back to square and the risk-aversion theme underpinned. The nations are likely to come back to table this week to resume chatters on negotiations.

The precious metal has turned more precious after the Maxar satellite images on Tuesday showed that the Russian military surrounding the north of Kyiv had stretched longer to 40 miles approximately than 17 miles, initially reported.

Meanwhile, the US dollar index (DXY) has overstepped 97.00 on upbeat US Manufacturing Purchasing Managers Index (PMI). The Manufacturing PMI reported by the US Institute for Supply Management (ISM) on Tuesday jumped to 58.6 against the market estimates and previous print of 58 and 57.6 respectively. While the US New Orders Index on Tuesday landed at 61.7 outperformed the estimates and prior figures.

Now, investors will focus on testimony from the Federal Reserve (Fed) Chair Jerome Powell, which is due on Wednesday. It would be interesting to see how Fed’s Powell will narrate the overview of upcoming monetary policy and economic situation in times when Ukraine is going through some serious crisis and world economy will face boiling oil prices.

Gold Technical Analysis

On a 15-minute scale, XAU/USD is marching towards $1,975.00 after giving a breakout of a symmetrical triangle, which was in a range of Thursday’s low and Friday’s high at $1,878.22 and 1,921.80 respectively. Usually, a symmetrical triangle denotes an expansion in the size of ticks and depth of volumes after breakout out from a squeeze in the range. The Relative Strength Index (RSI) (14) is holding above 60.00, showing no signs of divergence and overbought. The 50-period and 200-period Exponential Moving Averages (EMA) are scaling higher, which adds to the upside filters and may act as strong support going forward.

Gold 15-minute chart