The Russian invasion of Ukraine has triggered a sharp rise in the prices of agricultural commodities, energy commodities and base metals. Sanctions imposed by most of the world’s economies on Russia have again disrupted the supply chains of many raw materials and commodities.

  • wild rises in commodity prices
  • gold rises moderately
  • technical vs fundamental analysis

Compared to the commodities mentioned above, gold has increased in price relatively little. The difference between the pre-aggression price and the current price is only $100/oz which is about +5%. In comparison, oil rose from $94 to $120 per barrel, which is almost 30%. Wheat and corn have risen similarly.

Will gold, which is undervalued in this situation, experience a similar fate?

It is difficult to follow only technical analysis in the current situation, as sanctions imposed on Russia and news from Ukraine may change the sentiment at any time and negate any of the scenarios based on technical analysis.

Gold in March
GOLD D1 – new maximums this year.

Examining the daily chart of gold, we note that today the price has overcome the maximum from 24 February – the day of the beginning of the Russian aggression and established the new maximum this year.

Everything points to further increases. The nearest supply zone that could be a demand target is in the area of 2035 $/oz. Support level is 1975 – mentioned maximum from 24.02.

Gold h4 - bearish engulfing
Gold h4 – bearish engulfing

On the H4 chart the situation is more complicated from the technical point of view. A bearish engulfing pattern has appeared, which theoretically would indicate declines.

However, the breakout from the formation may also occur at the top, and probably this version is more probable, because MACD is still in the upward phase on H4 and on D1, which postpones the possibility of a bottom breakout and the beginning of the downward correction.

What will be the further fate of gold quotations? The war in Ukraine is a pro-growth factor for this metal and as long as MACD does not change direction, the bullish scenario is in play.

The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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