WEEK AHEAD: FEB 21

Short Description

Gold Rising with Ukraine Tensions

Video Script

Gold is at an 8-month high thanks to geopolitical tensions between Russia, NATO and Ukraine as well as rampant inflation. Is the gold rally just getting started or are we nearing the top? I give my take on this and rundown this week’s forex calendar. Stay tuned!

 

Hey guys, I’m Rich and a very warm welcome to the week ahead, where I analyse price trends and preview upcoming market events.

 

So gold is now back around $1900 per oz for the first time since June. A quick look at the daily price chart also shows the gold price breaking above a downtrend line that’s been in place since the record high in 2020.

So things are clearly looking up. It’s difficult for investors to judge the likely outcome of politics and military manoeuvring - so many take the view ‘better safe than sorry’ and buy haven assets like gold - as well as haven currencies like the Swiss franc. If the situation between Russia and NATO on the Ukrainian border escalates, then gold stands to benefit but of course if things are de-escalated, then gold could suffer.

However if gold does pullback around the geopolitical situation, gold bulls might view this as an opportunity because of inflation. US inflation just hit a massive 7.5% in January - higher than expected and another 40-year high. Put simply the consensus view from economists that inflation is close to a peak has not proven correct yet. Now at the same time, the latest FOMC minutes demonstrated a fairly relaxed view from the Federal Reserve about raising rates - with no specific timeline in mind. The more the markets view the Fed as “behind the curve” on inflation - the better gold stands to do.

 

OK, before I turn to the economic calendar – let me note what’s coming next in the Q4 earnings season. UK banking giant HSBC reports on Tuesday; eBay, Moderna, Barclays and Lloyds report on Wednesday; Chinese tech giant Alibaba, Coinbase and Beyond Meat have earnings releases on Thursday then Warren Buffet’s Berkshire Hathaway reports Q4 results on Friday.

 

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So let’s round things off with the economic calendar. It’s a slightly slower week with the New York Stock Exchange and Nasdaq closed for President’s Day on Monday. But Monday does see the release of the latest PMIS from the UK and Europe- offering a forward-looking view of the respective economies and investors brace for rate hikes this year. The major central bank meeting this week is from the RBNZ, which is expected to raise interest rates again after data showed the New Zealand labour market continued its record expansion into the fourth quarter. Lastly, the Fed’s preferred measure of inflation - the core PCE - comes out on Friday - offering another opportunity to trade around the chances of a 50-basis point hike from the Fed next month.

 

Right thanks everyone, good luck trading this week and make sure to click on subscribe so you don’t miss the next episode of the week ahead.