Gold gapped up 1.58% on open today after President Putin put Russia's nuclear deterrent on high alert. On Saturday, the US and allies imposed meaningful sanctions by blocking particular Russian banks from accessing the SWIFT international payment system, disrupting Russian commodity exports. As a haven, and considered a store of wealth, gold is supported by the fear that Russian ambitions may not be limited to Ukraine.
Weekly Gold Chart
The weekly chart has a triple moving average overlay to assist in determining the trend. The green fast green simple moving average (SMA) is above the medium orange SMA, and the medium orange SMA is above the slow red SMA (black ellipse). This formation is bullish. Moreover, the SMAs have angle and separation, which suggest a strong upwards momentum. If this technical pattern holds, our opinion is for higher gold prices in the coming months. This conviction will be strengthened with the stochastic moving into its upper quintile and maintaining that position (green rectangle).
The chart on the left shows the XAUUSD daily heikin ashi (HA) chart. The HA is a trend following indicator – it is blue, indicating an uptrend, and is in the bullish area, between the upper blue and red bands. The chart on the right is gold's hourly time frame. Here we see the gap on open. If the moving averages cross up, followed by the stochastic (black ellipses), this will be a bullish development. If the price moves towards the hourly stochastic's upper quintile and holds (blue arrow), the gap may be a breakaway gap. I.e., a platform for higher prices in the short term.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.