Gold prices have seen a remarkable weekly gain of nearly 6% due to the rapidly escalating Russia-Ukraine conflict. After two consecutive weeks of declines, gold has regained upward momentum, breaking past the $2,700 mark. This surge is reminiscent of the influx into safe-haven assets during the global banking crisis in March of this year. Analysts suggest that the escalation of the Russia-Ukraine war is no longer confined to a regional conflict but is increasingly evolving into a confrontation between Russia and the United States. This heightened uncertainty has further driven demand for gold as a safe haven. In particular, Russian President Vladimir Putin's move to lower the threshold for the use of nuclear weapons has underscored geopolitical risks, playing a significant role in this week's surge in gold prices.

With growing demand for safe-haven assets, investors are also focusing on the upcoming Federal Reserve meeting minutes and the December U.S. non-farm payroll data. Currently, market expectations for maintaining the policy rate unchanged in December stand at around 40%. If the meeting minutes suggest that the Federal Reserve leans toward cutting rates again in 2024, the dollar could face downward pressure, further supporting gold prices. Conversely, if the Fed signals stricter requirements for inflation or employment data, gold could face downward pressure in the form of a price correction.

Speaking on technical analysis level, gold's recent price action shows a clear bullish signal. On the daily chart, gold has successfully recovered its previous decline, reinforcing bullish sentiment in the market. For short-term resistance, the key resistance level is at $2,800 per ounce. Breaking through this level could trigger further gains, with targets potentially reaching the psychological thresholds of $2,900 or even $3,000.

If investor sentiment shifts negatively, gold may face correction pressure. The primary support zone is identified between $2,600 and $2,630. This zone coincides with the 61.8% Fibonacci retracement level of the uptrend since June, making it a critical reference for investors looking to buy on dips.If gold prices break below this support zone, downward pressure could intensify, potentially testing the $2,500–$2,540 range. This area is also seen as a crucial support for a potential rebound. Geopolitical risks and economic uncertainties are driving gold’s recent bullish performance. While the short-term outlook appears promising, investor sentiment and key support levels will play pivotal roles in determining whether gold can sustain its rally or face correction.

Hugo Leong

Gold Analyst of Hantec Group