Busy Start For Metals
It’s been a volatile start for metals traders as markets digest the developments over the weekend. With the Russian invasion of Ukraine yet to mark any significant progress and with Western sanctions against Russia building, there is a very tentative hope that peace talks between Russia and Ukraine might yield a ceasefire.
The ongoing investor uncertainty around the conflict keeps obvious safe-haven support in place for gold. However, markets are fearful over reports that Russia might look to liquidate some of its gold reserves to raise capital following exclusion from the SWIFT payments system. With foreign banks included in the system now no longer able to buy Rubles, the Russian currency has tanked by over 40% today.
Looking ahead, the outlook for metals remains heavily tied to developments within this situation. On the one hand, the longer Ukraine can hold out, and the greater the toll of Western sanctions becomes, the better the chance of some sort of peace accord being agreed. However, there are also fears that Putin might act in a desperate manner, if he sense failure, raising the risks of an escalation of the violence. With this in mind, incoming news flows this week will be key for metals traders.
On the data front, we have the US February labour reports due on Friday. With the market widely expecting the Fed to lift rates in March it will take a significant upside beat to drive any further hawkish, lifting USD. On the other hand, if we see any unexpected weakness, this will likely benefit gold and silver near term.
Technical Views
Gold
For now, gold prices remain hemmed in against the upper bull channel line and the 1919.92 resistance. With both MACD and RSI bullish, the focus is on further upside while 1871.04 holds as support. However, worth noting we are seeing plenty of topside tails here, suggesting risks of a correction lower near term. Any break below the 1871.04 level will put the focus on 1826.71 next.
Silver
Following the breakout above the contracting triangle and the local 24.7583 highs, price ran into selling pressure at a test of the 25.5348 level and has since reversed lower. For now, the market remains above the 24.0073 level support, keeping the focus on further upside near term, with both MACD and RSI bullish. However, should price slip back below here, the focus will be on 22.3205 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.