Analytics

Against this backdrop, the safe-haven gold opened sharply higher today. The precious metal extended initial gains to the $1,927 area before attracting some profit-taking. As dip buyers reemerged, the bullion has bounced back above the $1,900 figure that remains in the market focus during the European trading hours.

The $2,000 barrier in focus

Last week, gold prices rallied to September 2020 highs around $1,975 in a knee-jerk reaction to Russian President Vladimir Putin’s “special military operation” in eastern Ukraine. The bullion has corrected lower since then but stays elevated while clinging to the $1,900 handle, with upside risks persisting as long as the developments in Ukraine stay in the market focus.

As such, the yellow metal could see some deeper losses in the near term in case of a more aggressive technical retreat. However, the overall trend remains bullish, and it looks like the bullion could target the $2,0000 figure for the first time since August 2020 in the coming weeks.

In the immediate term, as Russia-Ukraine talks in Belarus have started, XAUUSD could struggle to see fresh gains as risk aversion has abated somehow, with investors expressing hope for some progress towards resolving the crisis. Should the outcome of the negotiations disappoint, however, safe-haven demand may push the prices back to the $1,930 zone, followed by the $1,960 intermediate barrier on the way towards the mentioned highs.

The overall optimism looks too fragile to bet on further gains in equity markets in the coming days, with the geopolitical backdrop posing substantial risks for high-yielding assets across the globe.

Of note, according to the latest news on this front, the US warned Ukraine of a full-scale Russian invasion within 48 hours. There are also reports that there has been a cyberattack in Ukraine. Meanwhile, the UN chief warranted that if Ukraine's conflict expands, the world could see a scale and severity of need unseen for many years. Furthermore, Ukraine has now announced a state of emergency which will start from midnight February 24.

Dollar claws back losses

Amid the latest headlines, the renewed risk aversion helped the safe-haven dollar claw back intraday losses versus most counterparts, with the USD index turning slightly positive on the day in recent trading. The greenback is now trying to regain the 96.00 figure that has been in the market focus since the plunge witnessed in late January. A daily close above this level would somehow improve the near-term technical picture while the key immediate upside target arrives in the 96.45 area that capped the momentum last week.

It looks like the situation surrounding Ukraine will stay tense in the coming days, which would be positive for the safe-haven dollar. Also, the buck remains supported by a hawkish Fed, with the central bank planning to start hiking rates as soon as March. On the other hand, however, the Federal Reserve could prefer a more cautious approach to tightening in the months ahead, citing rising geopolitical uncertainty that could persist in the long term.

Ethereum dropped back below the $3,000 mark while Ripple briefly plunged to the $0.75 level before paring some losses on Friday.

The largest digital asset by market capitalization and its counterparts faced strong downside pressure amid heightened tensions between Russia and Ukraine. Worries about further escalation on the geopolitical front and lingering concerns over a possible Russian invasion of Ukraine pushed cryptocurrencies lower across the board. Of note, digital assets plunged along with stock markets, with Wall Street benchmarks suffering a major sell-off on Thursday before some stabilization in recent trading.

In this context, the upcoming meeting between the US secretary of state Antony Blinken and the Russian foreign minister Sergei Lavrov will be in focus, both in the traditional equity markets and cryptos. Any signs of easing tensions over Ukraine could push bitcoin north in a sigh of relief. However, one shouldn’t expect the major conflict to be resolved anytime soon.

Bitcoin licks wounds, threatens $40,000

Technically, downside risks to the BTCUSD pair are limited as long as the prices stay above the $40,000 handle that had capped the recent sell-off. On the negative side, however, the coin has derailed the 20-DMA in the process and now struggles to stage any meaningful recovery, treading water just above the mentioned support, which implies that cautious buyers are not ready to reenter the game just yet.

In a wider picture, the most popular digital asset remains stuck in a range between the 20- and 100-week SMAs, looking set to finish the week lower for the first time in four weeks. Should the bullish momentum reenter the market anytime soon, the key local target could be expected at $46,000.

However, the coin failed to preserve the upside momentum and came under renewed selling pressure today. The BTCUSD pair retreated to the $43,300 support zone, a break below which would pave the way towards $43,000, followed by the mentioned lows, strengthened now by the ascending 20-DMA. As such, the short-term outlook for BTC stays relatively upbeat as long as the prices hold above this moving average.

Cryptos looks neutral amid directional stocks

The overall picture in the cryptocurrency market looks neutral at this point, while traditional financial markets struggle for direction on Thursday as investors continue to cautiously monitor developments in geopolitics. Sellers remain in control even after Russia had started pulling back its troops from the Ukraine border. Of note, the West warns that there is a growing Russian military presence at the border. As global equity markets stay in cautious mode, digital currencies refrain from decisive fluctuations as well.

In a wider picture, however, the BTCUSD pair keeps recovering gradually from mid-2021 lows seen below the $33,000 figure last month. The prices have been trending north for the fourth week in a row already, and should the bullish bias persist in the short term, the next resistance could be expected at $46,000, followed by the descending 100-DMA, currently at $47,600.

On the downside, the immediate support arrives at $42,000, followed by the mentioned 20-DMA which is a critical hurdle for BTC bears for the time being.

As EURUSD managed to hold above the 1.1400 figure that triggered local recovery, the pair advanced to intraday highs just below the 1.1450 zone during the European hours. Meanwhile, the USD index struggles to regain the upside momentum and was last seen trading around 95.40, down 0.24% on the day. It looks like the greenback could see deeper losses in the immediate term before attracting demand in anticipation of a major economic report. The immediate significant support for the index now arrives at 95.15, followed by the 95.00 figure. However, it looks like this level would withstand the pressure and push the greenback north eventually.

ECB adds to local optimism

The euro was also supported by the latest remarks from European Central Bank's Governing Council Nagel who said that he would advocate normalizing monetary policy if the inflation picture doesn't change by March. The economic costs of acting too late are significantly higher than acting early, he added.

As such, the euro edged slightly higher amid fresh hawkish hints from the central bank. In a broader picture, however, it looks like the common currency will hardly be able to regain the 1.1500 barrier as the divergence between the Fed and the ECB will keep capping gains in the euro while supporting the dollar. The EURUSD pair may get back below the descending 100-DMA in the coming days as the USD will regain the upside bias across the market should the upcoming report show another jump in consumer prices.

In Japan, retail sales, industrial production, consumer confidence, and housing starts data came in lower than expected. In Australia, ASX 200 climbed after the RBA said it ends the bond-buying program, as the central bank said the conditions for rate rises were not yet in place.

Meta Platforms spoils the party

US stocks were also buoyed as the recovery was spurred by dip buyers and mostly positive corporate earnings. On Thursday, however, Wall Street stocks tumbled after a four-day rally after Meta Platforms reported disappointing quarterly results that shook markets and wiped more than $200 billion off its valuation. The company’s shares plunged over 26% as its profit came in lower than expected in the fourth quarter. Furthermore, the Facebook parent revealed gloomy revenue guidance for the current quarter.

Following heavy losses, however, Wall Street indexes managed to bounce ahead of the weekend due to Amazon's positive earnings. The giant reported upbeat earnings in the holiday quarter that pushed the company’s shares more than 13% higher.

On the data front, the employment report showed US nonfarm payrolls increased by 467,000 jobs last month, compared with the 150,000 jobs addition expected. Equities managed to stay afloat after the release despite the strong result raised fears of faster-than-expected rate hikes by the Fed to curb inflation.

As such, all three major stock indexes ended their first week of February higher. Of note, Meta failed to enter a recovery mode and lost another 0.3% on Friday, while other social media companies rebounded strongly on solid quarterly earnings of their own.

Now that the bullion is back above the $1,800 psychological level, it looks like the prices could at least retain a bullish bias in the near term, with the next upside target arriving at $1,816 where the 20-DMA lies.

The yellow metal received a boost from a weaker dollar. The safe-haven greenback came under selling pressure as risk sentiment keeps improving since last Friday, with Wall Street indexes correcting north following the recent sell-off that had hit tech equities the most. The USD index has retreated from fresh mid-2020 tops to settle below the 97.00 figure. On Tuesday, the index is challenging the 96.40 support zone, a break below which would pave the way towards the 96.00 level.

The bullion is yet to confirm a bounce

However, it looks like the downside potential surrounding the US currency would be limited. The prices can resume the ascent after a local bearish correction that should attract buyers. So far, the greenback struggles around the mentioned lows, which implies that XAUUSD could hold above $1,800 in the immediate term. However, the metal is yet to confirm the recent bounce on a daily closing basis.

As US stock index futures turned lower in early pre-market trading, risk sentiment could deteriorate later in the day. In this scenario, the dollar would at least trim intraday losses during the North American trading, thus pushing gold prices lower from the current levels. While the $1,800 figure represents the immediate support, the next barrier for gold bears arrives at $,1795 where the mentioned 100-DMA lies.

Adding to investor concerns were fears of the Russia-Ukraine war and US-China trade tensions after US officials said that "patience wearing thin" in trade talks with China. Furthermore, the US Commerce Department announced restrictions on transactions with 33 Chinese organizations whose ownership is deemed to be “unverified”.

Market sentiment had improved since then but was hurt ahead of the weekend after fresh economic data out of the United States showed consumer prices surged 7.5% last month on a year-over-year basis, exceeding estimates of 7.3%. Adding to a more downbeat tone, Fed’s Bullard said he now wanted a full percentage point of interest rate hikes by July 1.

Brent exceeds $95 for the first time since 2014

At the start of the week, the price of Brent rose to $94/bbl for the first time since 2014 before retreating. Then, the futures extended the correction to the levels just below the $90 handle that helped cap the downside and pushed the prices above $95 ahead of the weekend for the first time since October 2014.

As for industry news, the Energy Information Administration reported that US crude inventories fell by 4.8 million barrels last week. The agency also reported weekly inventory declines of 1.6 million barrels for gasoline and 900,000 barrels for distillates. A day earlier, the American Petroleum Institute reported that crude supplies fell by 2 million barrels.

In a wider picture, the market positioning shows there is room for more gains towards the $100 psychological level within the ongoing bullish cycle, as the market has been supported by a combination of robust global demand and shrinking global spare production capacity along with declining inventory levels.

Cryptos follow equity markets

Buyer demand in the cryptocurrency market reemerged amid a recovery in US equity markets. Wall Street indexes bounced to finish higher overnight amid the oversold conditions. In a sign that risk sentiment keeps improving gradually, European stocks opened higher on Tuesday. However, as geopolitical uncertainty in Eastern Europe remains elevated and could escalate at any point, investors stay alert. In other words, the downside pressure in the global financial markets could reemerge at any point and thus push bitcoin lower as well.

BTCUSD needs to cling to $36,000 in order to avoid deeper losses in the near term. On the upside, a decisive recovery above the mentioned local highs would pave the way towards the $40,000 psychological level strengthened by the descending 20-DMA. However, it looks like the path of least resistance remains to the downside for the time being.

Bitcoin could get revisit the $33,000 figure in the short term to notch fresh multi-month lows before reversing north. On the downside, the immediate support now arrives at $35,000, followed by $33,000. Should the prices fail to hold above this level, the $30,000 mark will come back into the market focus. Of note, the intermediate support zone is represented by the ascending 100-week SMA, currently at $31,600. This region could prevent BTC from deeper losses if the potential bearish pressure appears to be measured.

Chinese stocks posted their biggest daily drop since July last year while Japan's Nikkei 225 dipped to the lowest level since December 2020. The deteriorated further after Jerome Powell signaled the Federal Reserve will steadily remove support for the economy as it battles the elevated inflation. The central bank chief said he backs a March liftoff and won’t rule out a hike every meeting.

Brent briefly derails $90 for the first time in seven years

Oil prices surged to fresh multi-year highs, derailing the $90 handle for the first time since October 2014 highs before retreating amid some profit-taking. As a result, Brent crude finished the week unchanged to settle just below the $89 figure.

The market is now driven by limited supply (amid OPEC’s underproduction) coupled with the geopolitical crisis in Eastern Europe. Also, the U.S. Energy Information Administration said earlier in the week that petroleum consumption increased in the country. Global oil demand has held resilient during the Omicron wave, adding to the upbeat tone in the oil market. Of note, earlier this month, the International Energy Agency revised higher its 2022 demand growth estimate by 200,000 barrels per day.

Brent crude has been rising since November, pushing banks to revise their forecasts higher. As such, now Goldman expects the price of oil to reach $100 per barrel in the third quarter of 2022, citing high demand despite a surge in COVID-19 cases driven by the Omicron variant.