Gold Price Forecast: XAU/USD rallies $20/oz to test $1,991 as traders run for cover

Gold price has breached five-month-old resistance at $1,965.60.

The underlying risk-aversion theme will continue to bring bids for the precious metal.

This week the US inflation numbers will remain a major indicator for further guidance.

Update: As the attacks in Ukraine intensify, there has been a $20.00/oz rally at the start of the Asia session with risk-off all around and higher commodities higher across the board. S&P 500 futures extend their fall to 1.1% and NASDAQ futures are off 1.2% while the US 10-year treasury yields have dropped to 1.68% as being the lowest since early January.

''Moscow threw the potential spanner in the works on Saturday, just as months of indirect talks between Tehran and Washington in Vienna appeared to be headed for an agreement, with Foreign Minister Sergei Lavrov saying the Western sanctions over Ukraine had become a stumbling block for the nuclear deal.''

US oil has skyrocketed and markets are fearing a protected conflict and risks to economic growth and stagflation.

Breaking: US oil leaps to $126.73 and UK oil to $138 on supply fears

Gold (XAU/USD) looks to open a positive note on the underlying risk-aversion theme in the market. The aggression between Russia and Ukraine gained a fresh wave of escalation last week after Russian leader Vladimir Putin ordered to execute Ukraines President Volodymyr Zelensky. The latter survived at least one assassination attempt by the Kremlin.

Ukrainian officials have confirmed one of the attempts, which they say was to be carried out by a unit of Kadyrovites, an elite special forces team based in Chechnya that serves the countrys president Ramzan Kadyrov, as per Globalnews.ca.

Moscow seems not interested in any diplomatic solution and is banking upon war as a last resort to fulfill its demands. The war situation between Russia and Ukraine is expected to escalate further amid the unavailability of any material outcome post two rounds of the Russia-Ukraine peace talks, which will continue to underpin the precious metal against the greenback.

Apart from the Ukraine crisis, Federal Reserve (Fed) Chair Jerome Powell advocated for a 25 basis points (bps) interest rate hike last week. This has diminished the preference for the greenback against the precious metal as the bets over an aggressive monetary policy by the Fed have been trimmed dramatically. Adding to that, upbeat US Nonfarm Payrolls by the Bureau of Labor Statistics on Friday failed to push the greenback higher against the gold. The US NFP printed at 678k, higher than the market consensus and previous figure of 400k and 481k respectively.

This week's Consumer Price Index (CPI) numbers by the US Bureau of Labor Statistics will have a significant impact on the direction of the precious metal. The print of US inflation may further dictate the likely Marchs monetary policy action from the Fed.

Gold Technical Analysis

On a weekly scale, XAU/USD witnessed a strong upside move after the breakout of the symmetrical triangle. This pattern depicts a consolidation, which constitutes small volume ticks and squeezes in the volatility but follows an expansion in the volatility after a decisive breakout. The precious metal has crossed a five-month high at $1,965.58. The Relative Strength Index (RSI) (14) has shifted above 60.00 after oscillating in a range of 40.00-60.00, which indicates a trigger for a fresh rally.