BREAKING: GOLD HITS $1900 AS RUSSIA/UKRAINE/NATO TENSIONS SIMMER

17 February 2022, 19:46

Spot gold (XAU/USD) prices hit $1900 per troy ounce for the first time since June 2021 on Thursday, taking its on-the-day gains to more than 1.5% as geopolitical tensions between Russia, Ukraine and NATO simmer, stimulating demand for safe-haven assets. Gold now trades more than 2.0% higher on the week, taking its two-week run of gains to nearly 5.0%.

Fears of an imminent Russian military incursion into Ukraine have escalated in recent days, with reports of shelling in the war-torn Donbas region of Eastern Ukraine on Thursday sparking fears that Russia is looking to create a pretext for military action, as the country continues to amass troops near the Ukrainian border. 

A positive technical backdrop has coincided with the increased safe-haven demand for gold; XAU/USD broke above a key long-term pennant structure at the end of last week. This week it fell back to the $1850 area to test the old long-term pennant and, promisingly for the bulls, found strong support. The bulls will now likely target a move above $1900 and towards the mid-2021 highs in the $1915 area.

US SEC. OF STATE BLINKEN DELIVERS REMARKS AT UN SECURITY COUNCIL – LIVE STREAM

17 February 2022, 17:09

US Secretary of State Antony Blinken will be delivering his remarks on the Russia-Ukraine conflict at a UN Security Council Meeting, from UN Headquarters in New York City, on February 17, 2022.

Markets remain risk-averse on Thursday on reports pointing to a heightened risk of a Russian invasion. The benchmark 10-year US Treasury bond yield is down more than 3% on the day and the S&P 500 Index is losing 1.25%.

Meanwhile, the US Dollar Index, which tracks the dollar's performance against a basket of six major currencies, stays relatively quiet below 96.00.

Ukraine's Foreign Minister: Fire from a tank recorded in Eastern Ukraine.

Russia says US security proposals not constructive, ignore key Russia security concerns.

 

EAST UKRAINE: AS OF 1500 LOCAL TIME, 40 ARTILLERY INCIDENTS RECORDED, TWO UKRAINIAN SOLDIERS INJURED

17 February 2022, 17:00

According to the Kyiv Independent, as of 1500 local time, over 40 artillery incidents have been recorded in the Donbas region of Eastern Ukraine and two Ukrainian soldiers have now been injured.

Market Reaction

The latest run of Russia/Ukraine/NATO headlines, which suggest more violence in Eastern Ukraine and worsening tensions, are weighing on sentiment, with the S&P 500 now trading more than 1.0% lower on the day. 

FEARS OF ANOTHER FINANCIAL CRISIS ARE WELL-FOUNDED – NATIXIS

15 February 2022, 15:06

Financial crises occur following a period during which three types of imbalances combine. Macroeconomic imbalances, regulatory imbalances and behavioural imbalances. The three imbalances needed for the next financial crisis to take place are present today, according to analysts at Natixis.

Cause for concern 

“There are again signs today of confluent macroeconomic, regulatory and behavioural imbalances. This is cause for concern, as the simultaneous presence of these three forms of imbalance has led to financial crises in the past.”

“Central banks are increasingly being caught in the same trap: in the wake of a crisis, they do not want to use policies to prevent the occurrence of a financial crisis and prefer to wait for the crisis to break out before responding. This explains the macroeconomic imbalance and some of the regulatory imbalance, as investors rotate into risky assets and risk premia are squeezed.”

 

US DOLLAR INDEX PRICE ANALYSIS: FURTHER UPSIDE TARGETS THE 96.90 AREA

14 February 2022, 14:18

• DXY climbs to fresh tops further north of the 96.00 hurdle.
• The next target of note comes around 96.90.

DXY posts gains for the third straight session on Monday, extending the recent surpass of the 96.00 barrier.

If the recovery gains more serious traction, then the index is expected to revisit the 96.90 region, where the November and December 2021 highs are located. The surpass of this level should expose a move to the 2022 peak around 97.40 (January 28).

In the near term, the 5-month line near 95.20 is expected to hold the downside for the time being. Looking at the broader picture, the longer-term positive stance in the dollar remains unchanged above the 200-day SMA at 93.62.

DXY daily chart