Gold Price Forecast: Bulls tiring at daily highs, gold bugs selling Russia news

• Gold price trapped in a range as sellers emerge to sell the news on Russia.
• Fed is moving back into focus as the Russian risk premium starts to decay. 
• Traders watching for further deployment of Russian troops in expanded borders of Donetsk and Luhansk.

The price of gold, XAU/USD, has been stuck in a sideways range this week so far, bouncing around between $1,914 and $1,886 as traders juggle the chorus of headlines surrounding the Ukraine crisis. At $1,905 during the time of writing, gold is trading near flat on the day so far. 

Traders have been whipsawed in financial markets due to the developments in Ukraine a day after Russian President Vladimir Putin recognized two breakaway regions in the country and ordered troops to the area. Putin said the troops would be "peacekeeping" in the breakaway regions - a claim dismissed by the United States as "nonsense".

In the face of a slew of sanctions imposed by Western powers, such as the UK, US and EU, the Kremlin said it remained open to diplomacy but, so far, there has been no confirmation of any summit between Russia and the aforementioned nations. The White House said Sunday a summit between the US and Russia will go ahead only "if an invasion hasn't happened."

Blinken & Lavrov meeting is critical

Meanwhile, talks between Secretary of State Antony Blinken and Russian Foreign Minister Sergey Lavrov in Europe this week are the main focus. This meeting, however, also depends on the condition that Moscow's troops don't further encroach into Ukraine. However, this condition might have already been severed as there are concerns that Russia now recognises the expanded borders of Donetsk and Luhansk.

The Guardian has recently reported, ''Putin confirmed that Russia had recognised the expanded borders of the two Russian-controlled territories in east Ukraine in remarks to the press.

'We recognised the states,' he said.

His dry explanation has explosive consequences: Russia could use the territorial claims as a cause to launch an invasion of more Ukrainian territory, saying it was defending the interests of its proxy states in Donetsk and Luhansk.

Putin stopped short of saying that he was about to launch a further invasion.

But Kyiv has always resisted negotiating directly with the governments of the Russian-controlled territories, saying it wants to speak with Moscow directly.

Having recognised the territories and received authorisation to use military force abroad on Tuesday evening, it has become clear that Russia is building the framework for what could be a broader conflict in Ukraine.''

Meanwhile, the sanctions are flowing with Britain publishing a list thereof and Germany already freezing the Nord Stream 2 Baltic Sea gas pipeline project, which would have significantly increased the flow of Russian gas. This is fundamentally critical for the price of commodities and gold given the risks of even higher inflation for which gold is often considered to be a hedge.

''Russia is the third-largest oil producer (behind the United States and Saudi Arabia) accounting for 11% of world production, of which is consumers only about a third and exporting the rest,'' analysts at ANZ Bank said.

''Russia is also a major supplier of gas to Europe. Germany has advised that it will not grant regulatory approval for Nord Stream 2, the recently completed gas pipeline from Russia to Germany. This pushed up gas prices by 10%.''

Fed consideration

''Nearing a geopolitical climax, gold bugs are selling the news on Russia,'' analysts at TD Securities argued.

''Gold prices have struggled to firm north of $1900/oz despite the significant escalation in the Ukraine crisis. After all, gold prices have rallied significantly ahead of the escalation in response to the associated geopolitical risk premium, leaving traders to sell-the-news on the event.''

''A path towards de-escalation could also be a catalyst for a substantial repricing in gold, considering that expectations for a 50bp hike in March from the Fed have also eased as a result of the conflict. We still expect the crushing weight of a hawkish Fed to ultimately sap appetite for precious metals.,'' the analysts finalised.

Gold technical analysis

The analysts also explained that the rise in Russin risk premium catalyzed a breakout from gold's wedge pattern, bringing in some chartist demand and sparking a substantial CTA buying program.

''Without sustained buying behaviour, gold prices are unlikely to remain in an uptrend, particularly as real rates rise sharply amid dual tightening via hikes and quantitative tightening,'' the analysts argued.

''However, if gold prices are going to succumb to this macro regime as we expect, then CTAs are accumulating at the top.''