Russia/Ukraine Fears Drive Safe-Haven, Oil Higher
Gold => The precious metal eases from 3-month high
USD/JPY => The pair falls below 115.50
Oil => The commodity hits a 7-year high
Gold Supported by Safe-Haven Flows
The price of Gold jumped 1.8% on Friday, helping the precious metal book its largest weekly gain since May 2021. The Gold market digested high US inflation and concerns over a more hawkish Fed. However, Russia – Ukraine tensions and fears of invasion sent the safe-haven surging higher. The U.S warned that Russia could invade Ukraine this week, a headline which saw Gold rally $40 in the space of a few hours, to $1866 a 3-month high, as market sentiment deteriorated. Today Gold prices are consolidating as some talks of diplomacy have helped calm concerns slightly. Although the ongoing tensions are like to keep Gold prices underpinned.
What’s next for Gold prices?
Gold has eased back from its three-month high and is testing support at 1853 the January 25 high. A break below here could see 1843 January 19 high tested, opening the door to 1830 January 21 low.
However, any fall lower could be short-lived given the golden cross, where the 50 sma has crossed over the 200 sma and given that the RSI remains over 50 in bullish territory.
Buyers could push the price over 1866 last week’s high to 1877 the November 21 high.
Oil Prices Rally Over 1%
Oil prices climbed to the highest level in 7 years amid growing fears that Russia could invade Ukraine and the US and Europe would apply sanctions, in an already tight oil market. Comments from the Biden administration that an attack is imminent has rattled the markets. The fact that oil supply is already struggling to ramp up, as OPEC failed to lift production to reach it targets again in January, highlights the problems that would arise if Russian oil was sanctioned. In that case, it wouldn’t take long for oil to reach $100 per barrel.
Support can be found at 92.50 (February 4 high) and 92.00 (round number)
Resistance for oil can be seen at 93.83 (today’s high) and 94.00 (round number)
Japanese Yen Rises on Russia-Ukraine Fears
USD/JPY is edging lower as concerns over a potential Russia – Ukraine war continue to hurt risk sentiment, boosting demand for the safe haven yen. However, the USD is also broadly supported amid expectations of higher interest rates. US inflation hit 7.5% in January fueling bets that the Fed could act more aggressively to tame inflation and raise interest rates by 0.5% in March. Meanwhile the BoJ continues to adopt a dovish stance. Japanese GDP data is due later. Stronger economic growth could lift the yen further
|Japan GDP Annualized||Expected: 5.8% (9.4%)||Previous: -3.6%|
Support can be found at 115.00 (February 11 low) and 114.70 (50 sma)
Resistance for the pair can be seen at 116.00 (round number) and 116.35 (2022 high)
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