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Weekly Summary (24/01/2022)

Inflation growing continue and gold has the momentum to rise

Last week, the gold price rose upward and the fear of inflation stimulated risk emotion. The gold price hit a high of 1847 and closed at 1835 at the end of last week, still in a high shock range now. According to the data released by the U.S. Department of labor on January 12, the U.S. consumer price index (CPI) rose 0.5% month on month and 7% year-on-year in December last year, the largest year-on-year increase since June 1982, highlighting the continued rising inflationary pressure in the United States.

In terms of international politics, US President Joe Biden predicted on Wednesday that Russian President Vladimir Putin would invade Ukraine and said that if Russia invaded comprehensively, it would pay a huge price. But he hinted that if "small-scale invasion", the cost would be smaller.

Biden's remarks brought confusion and uncertainty to western countries on how to deal with the invasion of Ukraine once Russian President Vladimir Putin ordered, which prompted the White House to later try to clarify Biden's meaning.

Biden said, "My guess is that he will advance and he has to do something. If Russia invades, it will be held accountable - it depends on Russia's action. If it is a small-scale invasion, we will eventually have to argue about what to do and what not to do, etc. that's one thing. But if they really do what they can do... If they invade Ukraine further, This will be a disaster for Russia. "

International political uncertainty is likely to trigger a new round of concerns about financial markets. This week, the United States delivered 90 tons of new strategic materials to Ukraine, further exacerbating the regional crisis. The increasingly tense situation may lead to a rise in the price of products with risk aversion characteristics such as gold, which may lead to a stimulus rise this week.

The labor department released a report on Thursday showing that the number of initial jobless claims increased for the third consecutive week and the data were also affected by adverse seasonal factors after the holiday. The number of new cases of Omicron variant infection is decreasing, with the seasonal factors, model used by the government to eliminate seasonal fluctuations from the data are expected to normalize soon, indicating that the recent sharp rise in the number of jobless claims is only temporary.

On the whole, the increase of Omikron in the world, the further aggravation of the situation in Ukraine, the expectation of the Federal Reserve's interest rate increase and the intensification of inflation are all conducive to the rise of gold prices. The market opened at 1834 on Monday and is still at high level. It is likely to rise to 1840 again this week and main market likely to continue the shock rise.

Technical analysis: brin interval is in the downward direction

Last week, after a sharp rise from 1810 to 1847 the price stabilized in the 1840 range, the latter half of which was basically in a slightly downward overall trend, the brin belt range fluctuated steadily and the price was generally in the lower half of the track. The price has jumped a little higher this week. At present, it is at the middle line of the brin belt track and in a downward trend.

Important information this week:

Thursday: 03:00 US January federal funds rate target upper and lower limits (%)

Thursday: 03:00 initial monthly rate of durable goods orders in December (%)

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