Gold Gains as Geopolitical Tensions Burnished Safe-Haven Bullion's Appeal

  • Commodities Analysis

Gold yesterday settled up by 0.01% at 48380 as a retreat in the dollar and geopolitical tensions surrounding Ukraine burnished safe-haven bullion's appeal, sparking a rally in precious metals. The yellow metal also benefited from its appeal as a hedge against inflation as oil prices rose to their highest since 2014, sparking concerns that price pressures could intensify. U.S. Secretary of State Antony Blinken said earlier in the day Russia could launch a new attack on Ukraine at very short notice but Washington would pursue diplomacy as long as it could.  
 
Expectations that the Fed would tighten monetary policy as soon as March has weighed on bullion this year because higher interest rates increase the opportunity cost of holding gold. Russia's gold reserves stood at 74.0 million troy ounces as of the start of January, the central bank said. The value of the bank's holdings was $133.07 billion, it said on its website. China stepped up its monetary easing efforts by cutting its mortgage reference rate for the first time in nearly two years. The People's Bank of China reduced the one-year loan prime rate by 10 basis points to 3.70 percent. The five-year LPR was slashed by 5 basis points to 4.6 percent. 
 
Technically market is under short covering as the market has witnessed a drop in open interest by -10.19% to settled at 4256 while prices up 3 rupees, now Gold is getting support at 48275 and below same could see a test of 48169 levels, and resistance is now likely to be seen at 48522, a move above could see prices testing 48663.  

Trading Ideas:
# Gold trading range for the day is 48169-48663.
# Gold rose as a retreat in the dollar and geopolitical tensions surrounding Ukraine burnished safe-haven bullion's appeal
# Prices also benefited from its appeal as a hedge against inflation as oil prices rose to their highest since 2014
# China stepped up its monetary easing efforts by cutting its mortgage reference rate for the first time in nearly two years.

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