XAU/USD risks a correction before next upswing kicks above $ 2K

Gold price has quickly pulled back from 19-month highs above the $2,000 mark.
The Ukraine crisis intensifies as the West plans a ban on Russian oil imports.
Overbought conditions on the 4H chart warrant cautious for gold bulls, uptrend still intact.

Gold price has shot through the roof in a bid to retest the $2,000 level, extending its last week uptrend. Gold bulls appear unstoppable, as a flight to safety continues to remain the main market motor amid escalating Russia-Ukraine crisis. Russia’s resolve to invade Ukraine gets entrenched deeper at the start of a new week so does the West’s commitment to isolate Russia and stop the war. The US and its NATO allies are weighing in a ban on the Russian oil imports, aimed at crippling the latter’s economy and isolating it from the rest of the world. This has quickened the pace of the oil rally, as the prices of both the US and the UK oil reached the highest levels since 2008. The oil shock aggravated global recession fears, prompting investors to seek safety in the traditional safe-haven gold.

Although investors remain cautious, given the extent of the gold price rally, as profit-taking could pick up pace on reports that the Russian military is said to hold fire and open humanitarian corridors in several Ukrainian cities at 0700 GMT on Monday, per Interfax. Further, the Western pressure on Russia could lead the latter to hold another round of ‘peace talks’, offering some temporary relief to gold bears. The hawkish Fed’s expectations, in the wake of the US Nonfarm Payrolls blowout, could also act as a trigger for the additional pullback in the bright metal. Meanwhile, the economic calendar remains sparse at the start of this week, leaving gold price at the mercy of the risk trends and the developments surrounding the Ukraine crisis.

Gold price, however, could see an extension of the ongoing corrective downside, as the Relative Strength Index (RSI) on the said time frame is trading well within the overbought territory, currently at 77.20.

Further retracement in gold price will call for a test of the previous month’s high of $1,975, below which the $1,950 psychological barrier could come into play.

The next relevant downside target is seen at the upward-sloping 21-Simple Moving Average (SMA) at $1,946.

Should the buyers regain poise, then gold price could recapture the $2,000 threshold, above which the triangle pattern target will be on their radars.