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Weekly Summary (21/3/2022)

Gold prices lose momentum and low-level shocks dominate

Spot gold fell about 2.5% cumulatively last week to trade near $1,939 which on track for its biggest drop since the week of Nov. 26, 2021, as safe-haven demand from the Russia-Ukraine war waned while investors digested the Fed rate hike. However, given that the Fed's 25 basis point rate hike last week which follow the expected, uncertainty over the situation in Russia and Ukraine expected to continue to play a dominant role in gold price action.

As the war in Ukraine enters its fourth week, the momentum of the Russian military's advance in Ukraine appears stalled, with Russian and Ukrainian negotiators holding video talks for the fourth day although their concern remain far apart. But with the war entering a stalemate, it has lost its previous hot spot value for financial markets to focus on. At the moment, while the war's movements continue to play an influential role in many markets, but ie very clearly that only plays on safe-haven product sentiment.

The Federal Reserve raised the federal funds rate by 25 basis points to fight soaring prices, which is Fed's first rate hike in nearly three years. The Fed and has expected to raise rates six more times this year, each time by 25 basis points. This will bring the target range for the federal funds rate to 1.75%-2.00% by the end of 2022. By the end of next year, the policy rate is expected to reach 2.80% and up from the 2.40% level that policymakers now believe will slow economic growth. And more notably, the Fed's latest forecast shows that policymakers are ready to step up their efforts to fight inflation, with St. Louis Fed President Bullard dissenting from this week's decision to support more aggressive rate hikes.

The price of gold is in a slump after a new opening this week and currently at 1923, which is at the lower zone. As the thrust factors that stimulate gold to rise have been highlighted in this week is not obvious, the main consideration during the week is the oscillation down trend and  prices mainly in the 1900 range.

Technical analysis.

Last week the price fell to minimum 1894 position after stabilization rebound, the highest to 1950. The overall trend of decline - climb - oscillation trend, due to the influence of fundamental factors, price in more depressed oscillation range. Last week, the first half of the price in the climbing range, mainly out of the upper Bollinger band line, followed by a lack of momentum into the lower rail line. Currently still in the lower rail line. Overall, it can be observed that the price momentum insufficient and the main trend status will be oscillation market.

Important information for this week.

Thursday: 20:30 U.S. February Preliminary Monthly Durable Goods Orders (%)

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