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Weekly Summary (16/5/2022)


Gold rose slightly on Monday and adding another change to the situation in Europe

Spot gold was generally in down and hovering situation last week, this Monday opened with a slight climb and currently in the 1810 range. Suppressed by the Fed's aggressive rate hike prospects and the strong dollar, gold prices on Friday once lost the 1800 mark and the dollar index narrowly oscillated around 104.5, slightly lower than the nearly 20-year high of 105.02 set last Friday, the short term dollar index is seriously overbought, need to beware of short-term pullback risk.

Russia-Ukraine war two sides have lost the basis and channels of negotiation, there is no significant stimulation of the financial markets news out, in general, the Russian military war is unfavorable and under greater pressure. It is worth noting that the situation in Europe has changed again as Finland has confirmed that it will apply to NATO for membership and NATO will certainly take a positive attitude towards this application.

In this regard, Russia put forward a stronger response, the Russian Federation Committee (upper house of parliament) Defense and Security Committee Chairman Bondarev said on the 15th, if Finland joins NATO, Russia will strengthen the deployment of troops at the border. The news that Finland will apply to NATO for membership is geopolitically disturbing, Bondarev said in a social media post on the same day. If Finland joins NATO and deploys NATO offensive strike weapons on its territory, Russia will strengthen the deployment of its troops on the border between the two countries. Finland and Sweden were not previously eager to join NATO, but the United States has been pressuring them, Bondarev said. It is important for the U.S. to include Finland in the U.S. sphere of influence and use it as a bridgehead for NATO exercises and provocations, a testing ground for NATO weapons and a U.S. military base.

The dollar is currently in a strong upward range and given that measures such as Fed rate hikes are likely to continue throughout the year, the dollar is only likely to see short term pullbacks while the long term will be a clear upward curve. In addition to this, as Europe will become more heavily dependent on the US for energy, dollar denominated commodity imports and exports will increase, which in turn will further push the dollar higher. Spot gold will remain under pressure in the long term range.

This week's strategy: hover low trading

Spot gold is more likely to remain in the 1800 range this week, with a range in the 1780-1820 range. Fundamental news mainly focus on Finland and Sweden to join NATO related key news and Russia-Ukraine war phase news. The main trading strategy can be selected as a light bearish position.

Technical analysis.

Last week, the market mainly out of the downtrend, prices in the second half of the pierced the lower Bollinger line straight down. Downward trend is obvious and basically in the lower orbit range. This Monday after the opening of the price after a short rise to continue to maintain the downward trend, still in the lower orbit range, currently at 1812 position, in the downtrend.

Important information for this week.

Tuesday: 20:30 U.S. monthly retail sales rate in April (%)


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