If you were a trader confident enough to participate in the commodities market this week, you would have had a week full of experiences. Not only Gold, but precious metals and commodities in general, were performing wonderfully with increased demand in the wake of the Russia-Ukraine geopolitical tensions.
Gold started off the week bearish on optimistic sentiment that the tensions were easing as Biden and Putin had a meeting to discuss resolution. This was short lived as Putin became more aggressive with his threats which sparked fear in the market – increasing demand for commodities. Up until Thursday morning (yesterday) all Putin was producing were threats of invasion and Cold War tactics by moving troops closer to the border, but with no physical invasion. On Thursday morning, the market concerns became a reality – with Russian troops moving into West Ukraine – the demand for safe haven products exploded with strength. Putin attacked military infrastructure, killing around 54 troops which included a couple of civilians. Gold hit a value of $1974… prices we have not seen in around a whole year.
Bullish investors have seemed to slowly subside as the UK, US and Europe increased economic sanctions on Russia, spurring confidence this may put an end to Putin’s wrath.
We have taken a snapshot of the four hourly feature as opposed to the Daily to provide some perspective on the technical analysis front.
As stated above, Gold began the week bearish, but losses were soon reversed due to increased tensions. The yellow metal closed flat on Monday, only to slowly increase value throughout the week. We have reported, last week, that price broke out of the daily channel, providing us with evidence of bullish sentiment which allows for short term trends to be in the spotlight. The four hourly has been respecting the bullish trendline, using it as a support level for buy entries.
Gold did reach $1974, but price was resisted at that level, only to hold at that point for a couple of hours. This shows us the potential and resilience this instrument has to move bullish in a significant manner.
Looking forward to the end of the week, all eyes are only on the geopolitical tensions, but investors should not forget the rising level of prices (inflation) in economies around the world.