Market Analysis

Gold at seven-month maximum over worries of potential Russian invasion in Ukraine

GOLD

Gold prices touched a seven-month maximum during early Tuesday trading, as worries continue over a potential Russian invasion of Ukraine. Investors are abandoning riskier assets and seeking the safety of the precious metal, as the brinkmanship between Russia and the West continues, with diplomatic efforts to solve the stand-off so far failing to yield any results. Should Russia’s invasion of Ukraine materialize, the geopolitical risk would be compounded by worsening economic prospects, with sharp rises in energy prices and diminished confidence amongst economic agents; a scenario likely to intensify investors’ flight to safe-haven assets, creating scope for further gold gains. However, such gains will be capped by a strengthening dollar, due to the inverted correlation between the two assets, as the greenback is likely to remain supported by the Fed’s hawkish resolve to control inflation.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

OIL

WTI crude oil prices eased down from the seven-year maximums reached during the previous session. Tension between Russia and the West over the potential invasion of Ukraine, has been one of the main factors behind the recent increases in the price of the barrel, with traders pricing-in the increasing likelihood of an armed conflict and the sanctions on Russian energy that would follow. Against such a back-drop, and in the absence of any significant developments, this morning’s drop in the price of oil can be explained by profit taking by investors, eager to cash-in on the gains recorded over the last few weeks.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 
Stocks edged higher everywhere in Europe on Tuesday, alongside US Futures, as market sentiment improved following some positive developments in Eastern Europe Benchmarks traded higher from Lisbon to Stockholm as investors welcomed reassuring signs of de-escalation in geopolitical tensions with Russia/Ukraine, leading to a new “risk-on” trading stance. While a lot remains to be done on the diplomatic front, most investors acknowledged ongoing talks were on a positive path which led them to buy the dips on equity markets. Solid rebounds are being registered on riskier assets while declines can be spotted in most safer havens, confirming portfolio rotation. That said, investors will cautiously monitor talks between President Putin and German Chancellor Scholz while more market volatility may also be brought by macro data, with the US PPI looming in the afternoon.

Pierre Veyret– Technical analyst, ActivTrades

 

Source: ActivTrader

 

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