one royal market analysis

Tuesday, February 22, Markets Overview

Russia vs Ukraine Tension

After the Russian envoy to the United Nations Vasily Nebenzya said that they remain open to a diplomatic solution, which eased the market nervousness over a worsening of the Ukraine crisis.  On Monday, Russian President Vladimir Putin ordered troops into two breakaway regions in eastern Ukraine to maintain peace. The latest update fueled fears about a full-blown East-West conflict.

In addition, expectations of new sanctions may be announced against Russia by the United States, which will keep investors on edge.

Weekly Fundamental Reports in the US

In the US, all eyes will be on the Durable Goods Orders for the month of January, released on the 25th of February. This report released by the US Census Bureau shows the state of US production activity and measures the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances.

As those durable products often involve large investments, they are sensitive to the US economic situation.

A reading below 0.8% will be considered bearish for the USD; however, a reading above this estimated number will be considered bullish for the USD. Another important news will be announced by the US Census Bureau on the same date. The Nondefense Capital Goods Orders ex Aircraft report of the month of January is also sensitive to the US economic situation because it measures the cost of orders received by manufacturers for capital goods, excluding the defence and aircraft sectors.

A reading below 0.4% will be considered bearish for the USD; however, a reading above this estimated number will be considered bullish for the USD. However, the developments in Ukraine will play a key role in influencing the broader market risk sentiment and infusing some volatility around gold prices.

Technical outlook

XAUUSD Price Forecast

Technical outlook 

From a technical perspective, a break below the $1,887 region will help limit the downside near the $1,887 mark. Failure to defend the support level could pave the way for an extension downtrend towards the $1,855. On the flip side, bulls will be initiated after a break above the June 2021 high around the $1,916 region. Gold could then accelerate the momentum and climb towards the next resistance at the $1,930 area.

WTI Price Forecast

The United Nations Security Council said that the “risk of major conflict is real and needs to be prevented at all costs” has cleared the doubts over Russia’s plan to invade Ukraine. The news has created havoc in the previous session. Crude Oil is hovering around $92.60, and imposing sanctions on Russia may further dampen the already vulnerable oil market.

In addition, the tightening in the oil supply will affect global operating activity. A break above $94 would open the door towards February 16 high at $94.98, immediately followed by the next resistance at $95.79. A break above this level will target the August 2014 high at $98.55.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.

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