Gold Price Analysis: XAU/USD hits one-week highs above $1950 as geopolitics remains in focus

• Gold hit more than one-week highs above $1950 on Thursday as focus remains on geopolitical risk.
• Focus now turns to whether XAU/USD can press on towards $2000 with more Fed speak and US PMIs upcoming.

Spot gold (XAU/USD) prices recently hit fresh more than one-week highs to the north of the $1950 level, despite the slightly stronger US dollar, higher US yields and subdued tone to global equity and commodity market trade. Typically, a slightly stronger US dollar would weigh on USD-denominated gold by making it more expensive for the holders of foreign currency, while higher yields increase the “opportunity cost” of holding onto the precious metal. It thus appears that traders are buying gold as a hedge ahead of important upcoming geopolitical risk events in Europe.

Coming up, NATO’s Secretary-General Jens Stoltenberg will be partaking in a press conference following an extraordinary meeting of the NATO Heads of State earlier in the day. At that meeting, as well as Thursday’s EU Council Meeting, Western nations are expected to announce further sanctions on Russia and support for Ukraine. One of the key themes if whether the EU will embargo Russian oil, with initial reports suggesting the bar for this is high.

Meanwhile, the situation on the ground in Ukraine doesn’t give any cause for optimism with the war having seemingly entered a stalemate and the Ukrainians now accusing the Russians of using white phosphorous in the east amid stalled peace talks. Traders clearly view gold as good value at current levels given these risks, hence why XAU/USD was able to push convincingly back above its 21-Day Moving Average for the first time since the middle of the month. Ahead of more Fed speak and US March flash PMIs, focus will be on whether the precious metal can make further headway back towards the $2000 mark.