Fundamental outlook
Last Wednesday, Russian troops retreated from Ukrainian border to Moscow. The war tension ebbed and WTI Crude prices waned from its seven-1/2 year high. The following day, Ukrainian Government blamed the pro-Russian separatists for attacking the villagers near the border.
On Friday, President Joe Biden warned that Russia might attack Ukraine within days and says there are still 150,000 Russian Troops near the border of Ukraine. Gold prices surged to a nine-month high above US$1,900 per ounce before the weekend as global investors seek a safe haven for funds.
The US producer prices rose one per cent in January, the highest in seven months record, signaling rising inflation in market. Core prices gained 0.8 per cent, exceeding forecast.
The US Senate passed bills to the Biden’s administration to prevent a government shutdown after March 11. Pressured by the domestic inflation and threats of war outbreak in Ukraine, the Dow fell about 700 points on weekly close as of Friday’s closing.
The UK consumer prices rose to a 30-year high at 5.5 per cent, beating forecast. Retail sales gained 1.9 per cent in January, above forecast.
Technical forecast
US dollar/Japanese yen traded in a slightly weakened state. The market might head down further if resistance can be safeguard at 115.50. The downside target might hit 114. Risk control is advised.
Euro/US dollar saw a slight weakness before the week’s closing. We predict the trend will test 1.125 before recovering. The overall range will be contained from 1.1250 to 1.14 for the time being. Observe the dollar’s trend as a lead factor to the euro’s trend.
British pound/US dollar is trapped in a sideways region, hovering at the EMA200 line. We project the price movement will wrap around 1.35 to 1.37 without a clear direction. The true headway will be revealed once it breaks away from this price range in either direction. Traders are reminded to observe proper risk control.
WTI Crude prices simmered down last week as the predicted warfare did not breakout as warned bythe US Government. However, the market is still holding above US$90 per barrel. We reckoned the range could be contained from US$90 to US$95 per barrel as international investors stay focused on the Russia-Ukraine crisis.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded at lower prices after the rollover on Tuesday. The market has been uncertain as traders observe crude prices as a leading trend.
May 2022 Futures contract settled at RM5,540 per metric tonne on Friday. We forecast the market will likely do a correction and range from RM5,200 to RM5,600 per metric tonne.
Beware of the day settlement above RM5,600 per metric tonne that might initiate a new bullish trend to RM5,800 per metric tonne level.
Gold prices reached US$1,900 per ounce as we predicted last week. The Ukrainian war tension pushed strong demand into the gold market and it might continue this week. We foresee the range will be contained from US$1,880 to US$1,930 per ounce.
In view of the Ukraine-Russia crisis, there could be huge buying interest waiting at the bottom area in case of a drawdown correction.
Silver prices have exhibited a firm reversal-up above US$22.30 per ounce. Moving forward, the trend will probably continue to climb but in a limited range.
We target the market range will move from US$22.50 to US$24 per ounce and prone to bullish sentiment. Gold will continue to lead the precious metals market.
Dar Wong has more than 30 years of trading and hedging experiences in global financial markets. The opinion is solely his own. He can be reached at dar@alaa.sg.
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