Gold prices are surging above the $2,000 level as the Ukraine situation goes from bad to worse, as the border dispute looks like it could be about to spill over into a major conflict.
The yellow metal hit the headlines last week amidst the tensions between Russia and Ukraine, helping it post a third consecutive weekly advance and move to a fresh 2022 trading higher.
Looking at the latest COT report, managed funds piled into the yellow metal and were their most bullish on it in three-months but. This week, funds net-long exposure if actually much higher than last week.
Without a doubt, the biggest threat to gold prices right now is a Russian retreat. And as this look increasingly uncertain we could be seeing gold challenging $2,000 sooner than later.
Current sentiment metric towards gold show that traders are becoming more bearish, which is unusual. The ActivTrader market sentiment tool shows that only 38 percent of traders are bullish towards gold.
While this is a minor drop since last week, it is very bullish for gold price, that after retail have remained long towards gold for so long that this crowd of retail cohorts are shunning this current advance.
For me, the current sentiment bias towards gold suggest that gold can still rally, as traders really aren’t that bullish towards the metal, which is typically a great sign for further upside.
Gold short-term Technical Analysis
The short-term technicals for the yellow metal show that a large head and shoulders pattern has been invalidated, paving the way for further price gains in the yellow metal.
Looking at the four-hour price chart, the size of the invalidated price pattern is pointing towards a coming price rally towards the $2,000 level due to its $120.00 price projection.
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Gold Medium-term Technical Analysis
The daily chart shows that gold remains a strong buy while trading above the $1,840 level, after bulls rallied the price above a massive wedge pattern.
If the bullish breakout continues, we could easily see gold price tackling $2,000. If a reversal, and subsequent bearish breakout inside the wedge takes place, we could see $1,840 quickly coming into focus.
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