ATFXRussia and Ukraine tensions boost gold prices

US President Biden said at an emergency summit of Western leaders that Russia may16Japan launches an offensive against Ukraine. The United States' firm statements have inspiredgoldThe market's risk aversion sentiment saw gold rise by a significant margin last Friday1.26%The weekly increase is close3% However, both Russian President Putin and Ukrainian President Zelensky denied the possibility of war, with the former stating that the mobilization of troops within the country is not targeted at any particular country; The latter expressed the hope to resolve the current conflict through negotiation. While the United States continues to exaggerate the severity of the problem, both Russia and Ukraine hope that the tension can cool down. Setting aside the verbal statements from all parties, a relatively objective phenomenon is that Ukraine's airspace is still open and flights from various countries can still operate normally. This indicates that the situation between Russia and Ukraine is not as exaggerated as portrayed by the US. Expected this month16There won't be any major incidents between Japan, Russia, and Ukraine,17After losing the support of safe haven sentiment (geopolitical), the daily gold price will begin to decline.
The most important concern for gold traders at present is still the United StatesCPIData and the Federal Reserve's tightening monetary policy are the fundamental factors driving the long-term fluctuations in gold. The latest issue of the United StatesCPIup to7.5%The sentiment of buying gold among the public to avoid the risk of US dollar depreciation is high, which is a strong support for the current gold price. The Federal Reserve's tightening monetary policy is still in the stage of reducing monthly bond purchases, which cannot be called tightening monetary exposure. It is more appropriate to call it "reducing loose exposure". However, the market expects this year3The Federal Reserve will initiate a rate hike path this month, which will drive up the value of the US dollar. Due to the fact that international gold is priced in US dollars, the appreciation of the US dollar also means a decline in gold. If there were no interference from the Russia Ukraine situation, the gold price would maintain a volatile pattern under the dual factors. Nowadays, there have been changes in the macro situation, and our short-term view on gold prices has shifted from volatility to cautious bullish.

Ten year US Treasury bonds


The yield of US Treasury bonds has shown a high-level passivation, and unless there is a stronger expectation of interest rate hikes, it is difficult to continue to rise. The increase in bond yields will suppress demand for gold, as the former also has hedging properties and interest income. Latest yield of 10-year US Treasury bonds1.9%The yield of one-year US Treasury bonds1.07%The yield of bonds with other maturities falls between the two. This yield is already at a good level, and if the problem of high inflation is resolved, gold prices are likely to experience a long-term downward trend.
Latest value of the US dollar index96.3Last year, it was11month24Within the range of recent fluctuations. At the mid to short term high point97.45Before being broken, the US dollar index had a weak inhibitory effect on gold prices. Considering the increasingly hawkish monetary policy views of the Federal Reserve, there is no basis for a sustained decline in the US dollar index. Overall, the probability of the US dollar index fluctuating at a high level or rising weakly is relatively high.

▋ Gold Technical aspect


Resistance level (green line)1854It has already been breached, and with the escalation of the Russia Ukraine situation, it is expected to further rise. self17From the beginning of the day, it is important to remain cautious about the rise in gold prices, as the market has found that the situation between Russia and Ukraine is not as serious as portrayed by the United States, and risk aversion is bound to decline significantly.

Summary
ATFXThe analyst team believes that we insist on16There will be no substantial conflict between Japan, Russia, and Ukraine, and the current rise in gold prices has temporary characteristics. Before the Federal Reserve stops tightening its monetary policy, the US dollar index will fluctuate and strengthen, and it is difficult for gold prices to have a strong upward trend.

*Risk Tips and Disclaimers*
There are risks in the market and investment should be cautious. The above contents only represent the views of analysts and do not constitute any operational recommendations.