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Weekly Summary (28/02/2022)

Russia and Ukraine started negotiations and the both side started their chip preparations

Gold prices fell after opening high in last week, rising from 1888 to 1975 then falling down to 1876. This Monday's high jump opening and currently in 1909 position.

The recent price mainly controlled by the geopolitical situation. The crisis between Russia and Ukraine has gradually intensified. The Russian army entered Ukraine in last week and fought smoothly in the initial stage. At present, it is hit back by the Ukrainian armed forces and the war between the two sides may fall into a stalemate. On the other hand, the two sides have reached an agreement on negotiations and representatives of various factions have held talks in Belarus. It expected that the talks will reach a certain agreement which may promote the cessation of military operations.

Over the weekend, Russian President Putin announced that he would put nuclear weapons on alert. At the same time, many countries such as Europe announced that they would close their airspace to Russia. The United States also decided to suspend the swift payment system of Russian financial institutions within certain limit. However, at the negotiation level, it would cool the market risk aversion slightly.

When the sanctions against Russia launched at the beginning of the war had no obvious effect, western countries were taking new measures to make Russia an isolated island in economy, finance and commerce. Excluding major financial institutions such as the Central Bank of Russia from the swift financial information transmission system is tough measure at the level of "financial nuclear bomb", which means that Russia will be excluded from the dollar system and will not be able to carry out normal international trade and financial activities, payment activities, or use the country's overseas reserve funds to hedge the impact of sanctions. These crackdown measures will cast a shadow on the Russian economy for a long time. However, it is not possible to quantify the specific number of losses this will cause to Russia.

Putin issued instructions to the nuclear weapon forces on Sunday, putting Russia's nuclear strike force on alert. In response to NATO countries' support for Ukraine and economic sanctions against Russia. Putin explained that this was an action against NATO countries unfriendly remarks.

The U.S. stock market began to rebound. The Dow Jones industrial average of the U.S. stock market hit its largest one-day percentage increase since November 2020 on Friday and the oil price fell below $100 a barrel. The positional relationship between the stock market and commodities is in line with the financial trend model during the war. If Russia and Ukraine can reach a certain degree of reconciliation in the negotiations, it is possible to further increase the comparison between the stock market and commodities.

Although the situation in Ukraine still at a relatively severe level, it does not rule out that the two sides are preparing chips for the upcoming negotiations and preparing for the breakdown of the negotiations. The lowest point of Russia's appeal is the cessation of NATO's eastward expansion and even its territorial requirements for Ukraine. It is difficult to predict whether what extent Ukraine and NATO will accept this condition. It necessary to observe the specific conditions and progress of the negotiations between the two sides in this week.

Technical analysis: the inverted V reversed and the market enters the ups and downs market

Last week, the market fluctuated greatly. In the initial stage, the 5-day moving average crossed the 10-day moving average and went straight up. After reaching the high point it fell back. The price formed an inverted V-shaped reversal. In the later stage, it fluctuated in the 1880-1920 range without forming a large trend space. On Monday, it jumped high opened. At present, it fluctuates in the high-level space above 1900. it greatly affected by fundamental information, so the 5-day / 10-day moving average can be used to cross break through and observe the price trend.

This week's strategy:

At present, the gold price still belongs to the range of the situation in Ukraine, focusing on the geopolitical and military actions in the region. Intraday technical analysis used to judge the trend starting point. the risk aversion has not completely subsided and price also above 1900, and the market still in the emotional range of hesitation and wait-and-watch.

If the situation in Ukraine worsens again this week, we can consider looking at the upper range of 1920-50. If there is easing information may constitute a decline in the short term. However, when the background of the conflict is not over, there is little possibility of a significant correction in the price of gold. The main range of this week is to consider the market of shock upward trend.

In addition, the non-farm data on Friday is also worthy of attention, because the rise of US inflation data fierce and remains high. The non-farm data on Friday may reach new high and the short-term impact on gold prices may be greater.

Important data of this week:

Wednesday: 21:15 US February ADP employment (10000)

Thursday: 23:00 US January factory order rate (%)

Friday: 21:30 after the quarterly adjustment of non farm payrolls in February (10000)

                       US unemployment rate in February (%)

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