Gold tests $1900 as the “peace trade” picks up steam

“All we are saying is give peace a chance.” – John Lennon

There’s a heavy hint of optimism in the air amidst headlines of potential Putin-Zelensky peace talks and the Russian military cutting back operations near Ukraine’s capital Kyiv. Traders have taken that hint and are aggressively putting on the so-called “peace trade,” driving European indices up 3%, WTI crude oil back below $100, and gold back at $1900 for the first time this month.

Keying in on the yellow metal, prices have now put in a lower high and a lower low after seeing the blowoff top up to $2070 earlier this month; notably, the 14-day RSI indicator is also breaking down below its equivalent support level near 50. A close near current levels would shift the near-term technical bias in favor of the bears, with the next support level to watch coming in around $1870, where previous-resistance-turned-support from November and the 100-day EMA converge:

Source: TradingView, StoneX

If the $1870 level gives way in the coming days, a continuation down toward bullish trend line support in the lower $1800s could be next. Meanwhile, a re-escalation of military operations in Ukraine could reinvigorate gold buyers, though traders would likely need to see a confirmed break back above $1960 to shift the near-term bias in favor of the bulls.

Day-to-day headlines out of Ukraine continue to drive markets across the globe, but we’ve had numerous examples of what the so-called “peace trade” will look like in recent weeks. Between gold, oil, other commodities, and global indices, traders will have plenty of opportunities to take advantage of the market moves when global leaders eventually channel their inner John Lennon and give peace a chance.