In early trade on Monday, gold prices soared past the $2,000 level for the first time in 18 months. The escalating crisis in Ukraine boosted the demand for the safe-haven bullion. Spot gold rose by 0.9% and U.S. gold futures by 1.3%.
Spot gold is currently trading at $1,985.78 per ounce as of 0740 GMT.
Meanwhile, around 200,000 residents were trapped in Mariupol as the fighting continued. Russian forces encircled the city and cut off food, water, power and heating supplies. Russian President Vladimir Putin vowed to press ahead with his invasion unless Ukraine surrenders.
Ukraine President Volodymyr Zelensky will ask the United Nations top court to issue an emergency ruling to stop Russia’s invasion. Putin said Russia’s “special military action” was needed to protect people subjected to bullying and genocide. But Zelensky argued that the genocide claim is untrue, and in any case, does not provide legal justification for an invasion.
In physical trading, rising prices dampened demand in major Asian hubs. Higher prices and uncertainty over Ukraine put off physical gold buyers in China. It prompted dealers to offer a $2 discount, from $2-$6 premiums last week. Consumer demand was almost nil in India as prices jumped to their highest levels since August 2020. Dealers offered discounts of $27, the highest in nearly 18 months.
On the technical front, Reuters technical analyst Wang Tao predicted that the powerful wave C would keep pushing spot gold prices up to $2.065.
DailyFX strategist Daniel McCarthy suggested that gold’s breach of an 18-month peak opens up the possibility to test an all-time high of $2,075.14. But the bullion needs to first clear a resistance level at $2,015.65. On the downside, McCarthy sees immediate support at $1,965.55 and $1,959.33.
FXStreet senior analyst Dhwani Mehta added that gold prices were on track to achieve their pattern target at $2,034 per ounce. The bullion has confirmed an upside breakout from a symmetrical triangle formation last Friday. However, the yellow metal could extend downside correction as the Relative Strength Index (RSI) trades within the overbought territory.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, climbed 0,4% on Friday to 1,054.3 tons. That is their highest level since mid-March 2021.
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