Gold prices skyrocketed to three-month highs around $1,865 last Friday due to the safe-haven demand triggered by the resurgent geopolitical tensions surrounding Ukraine. As a result, the XAUUSD pair finished the week with solid gains amid some retreat in the greenback after failed attempts to regain the 96.00 figure.

Earlier on Monday, the USD index received a fresh bullish boost to notch early-February highs around 96.35. However, the greenback failed to extend the ascent and gave up some gains during the European trading hours as risk trade bounced after Russian Foreign Minister Sergey Lavrov told Russian President Vladimir Putin that the US had put forward concrete proposals on reducing military risks and that there was always a chance for agreement.

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Against this backdrop, the safe-haven precious metal now lacks upside momentum while still holding above the $1,850 zone that represents the immediate support, followed by the $1,830 intermediate barrier for gold bears. Should this region give up, the ascending 20-DMA, currently at $1,823 will come back into the market focus.

It looks like the bullion will stay volatile in the coming days or weeks as geopolitics could continue to set the tone in the global financial markets, making investors nervous. Adding to market worries, the Federal Reserve continues to signal a more hawkish approach towards tightening amid the elevated inflation. Of note, Fed’s George said earlier in the day that the central bank should weigh asset sales to curb inflation.

In this context, the bullish potential in the gold market will likely stay limited as aggressive remarks from FOMC members along with strong economic data out of the United States would continue to support the greenback along with US Treasury yields.