Market Analysis

Gold is on the rise, approaching multi-month high

GOLD

Gold is up during early Thursday trading, approaching the multi-month high reached earlier in the week. The precious metal’s strength arises from concerns over developments in Eastern Europe, where the impasse between Russia and the West continues to be a cause for concern. Such a climate is conducive to greater demand for gold, due to its haven status, while the precious metal is also benefiting from a moderate dollar sell-off. Yesterday’s release of the latest FOMC minutes revealed a sentiment amongst the Fed’s monetary policy officials that was less hawkish than some had expected, leading to moderate dollar losses, which benefited gold due to the inverted correlation between the two assets.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

FOREX

The US dollar spiked during early Thursday trading, following reports of a flare up in tension between Ukrainian and Russian forces, only to give away the gains shortly afterwards, as the episode proved to be insignificant. With the political impasse continuing in Eastern Europe, traders took some time to look at the latest FOMC minutes, which came out yesterday. The minutes revealed that the Fed’s monetary policy committee overall stance is perhaps less hawkish than dollar bulls had expected, with the disappointment leading to moderated dollar weakness. However, the greenback could easily regain the front foot, as any escalation in geopolitical uncertainty is likely to reignite its safe-haven appeal.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

OIL 
Oil is back on the front foot during early Thursday trading, recovering some of the losses recorded over the previous two sessions. The stand-off between Russia and the West over Ukraine remains a cause for concern, as contradictory messages are generating uncertainty over the real possibilities of armed conflict and resulting sanctions on Russian exports. After Russia announced a partial withdrawal of troops from the border with Ukraine, oil prices eased down from multi-year highs, but the veracity of the withdrawal is still being questioned by Western governments and this is driving oil prices up, as traders re-price the geopolitical risks. In current market conditions where supply is already tight, the export sanctions on Russian energy exports likely to be imposed after any conflict, would create even more scarcity and potentially drive the price of the barrel beyond the $100 mark.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

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