$1900 Level May Be Gold's Monthly Finale

Summary:

Gold experienced an explosive spike and a surprisingly sharp pullback this past week; the factors that drove the price spike are apparent, yet there was clearly a significant risk premium for a sharp pullback, prompting institutional profit-taking. This week, when the market's attention will turn to Fed Chairman Powell's testimony and Friday's non-farm payrolls data, gold should return to its proper "financial" properties.

$1900 Level May Be Gold's Monthly Finale_1

Overview

Intraday Trend: Oscillating back down (New York session)

Entry-level: long 1909

Target: 1920

Profit/Loss Ratio: 2:1

Stop Loss: 1903

Fundamentals

The upcoming month of February has been nerve-wracking for markets as the U.S. and EU imposed tough sanctions on Russia. Major U.S. stock indicators tumbled last week, gold prices surged to a nine-month high, while crude oil touched its highest level since 2014.

If the current U.S. and EU sanctions against Russia are the limit of all measures, the impact of these sanctions on the global economy may be limited; that is why we saw short-covering in the stock market last week, while the gold price saw a fairly high-risk premium and profit-taking. (Gold pulls back sharply)

Up next, the Fed's policy tightening path will be the main driver for gold if concerns about geopolitical tensions subside.

San Francisco Fed President Daley said the Fed should continue to raise rates even with uncertainty over the NATO-Russia conflict because of high U.S. inflation and a strong labor market. She said at an event in Los Angeles last Wednesday, "I really don't think the Fed won't raise rates in March unless things get worse.

Although the Fed said it would raise rates at its March meeting to deal with current inflation, it also faced many challenges such as declining consumer confidence, market weakness, and very pessimistic investor confidence. In the United States, consumers drive 70% of economic growth. This is why "price stability" is so important to the Federal Reserve.

Nevertheless, Fed officials are beginning to consider the impact of events that could slow growth and exacerbate inflation; because a further climb in real Treasury yields could lift the geopolitical risk premium currently affecting gold prices. $1900 Level May Be Gold's Monthly Finale_2

$1900 Level May Be Gold's Monthly Finale_2

Technical Analysis

Gold continues its bullish trend in the daily chart. In this case, the 20 SMA has been steadily moving higher below the longer averages, reflecting limited relative short interest. In the 4-hour chart, however, gold's short-term bearish sentiment is quite evident; the shorts have been refusing to rise around the 20 SMA, which currently offers dynamic resistance only around 1909, with the long-term moving averages remaining below current levels.

Although the bullish sentiment in gold has cooled in the hourly chart, the shorts have never been able to pull the price below the 10-day SMA; in this case, the bulls are still expected to gain a small amount of upward momentum and are advised to consider buying on the low side. Above resistance 1920, below support 1900, (10-day SMA) 1891.

Risk Warnings and Disclaimers

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Samantha Luan

Crude Oil Market Sees Month-end In Oscillation, Intraday Price Is Expected To Retreat_1

Overview

Intraday trend: Oscillating back down (New York session)

Entry-level: short at 95.30-96.30

Target: 92.50

Profit/loss ratio: 2:1

Stop loss: 97.00

Fundamentals

(28th) On this Monday, markets continued to trade around the escalating conflict between Russia and Ukraine. The latest cascade of US and EU sanctions against Russia has stirred global markets. This is best exemplified by the sharp spike in energy prices in recent weeks (Russia's importance in the European energy market); even these developments have affected the US energy market. Meanwhile, Western politicians, fearing supply chain disruptions, are calling on OPEC+ to prepare to increase production in response to potential shortages in Russian energy exports.

In an emergency meeting on Monday, the EU discussed how to respond if Russia halts gas supplies in retaliation for sanctions. Several EU member states believe that the decision by Western countries to impose sanctions on Russia's central bank and to exclude some Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial messaging system both increase the risk of retaliation by Russia, according to three related EU diplomats. At the meeting, the European Commission will present its analysis of energy supply security, as well as simulated responses to supply shocks. Ministers will then exchange views on the current situation and potential contingency measures.

According to the wall street journal, the US and other major oil-consuming countries are considering releasing 70 million barrels of oil from emergency reserves as crude prices soar, said European and Persian Gulf officials briefed on the plans. Officials said that those International Energy Agency (IEA) members could agree to release national strategic oil reserves as early as Monday or Tuesday. That would include 40 million barrels of crude from the US, primarily light crude oil, they said. People familiar with the matter said the US has informed Saudi Arabia and asked to ensure that OPEC does not interrupt the planned production increase. Also, according to the latest news from the Wall Street Journal, OPEC+ is expected to agree to increase production by 400,000 barrels per day at its meeting on Wednesday.

Russia is the world's third-largest oil producer and second-largest oil exporter in global energy market share. Given the current low inventories and dwindling idle capacity in various countries, the oil market cannot afford the consequences of large-scale supply disruptions caused by the Russian-Ukrainian conflict. As much as 2.3 million barrels per day (BPD) of Russia's 4.6 million BPD of crude oil exports to the West, cutting Russia's ties to SWIFT would mean further tightening the supply/demand balance.

The situation in Ukraine will help keep oil prices rising. In an environment of strong global demand and constrained supply, the real or imagined threat of supply disruptions will promot prices higher. It is believed that Brent crude, the international benchmark, will fluctuate in the $90-$110 range over the next few weeks.

Crude Oil Market Sees Month-end In Oscillation, Intraday Price Is Expected To Retreat_2

Technical Analysis

Crude oil opened high but went low today. It is expected to fill the gap structurally. The upper top-bottom converted point is near 96.30, and the lower gap support is near 92.50. Operationally, when the price rallies to 96.3, sell stocks short with a small sum of money; when it falls back to near and above the 92.50, buy stocks long.

Risk Warnings and Disclaimers

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Devin

After the Russian invasion of Ukraine began some analysts said oil can hit $130 a barrel and Iran's supplies will be needed, but prices pulled back on Friday.

Bloomberg quoted Rystad Energy Chief Executive Jarand Rystad as saying that the conflict could jeopardize one million barrels of crude that flows through Ukraine and the Black Sea, but “long-term disruptions could be far more significant.”

Adi Imsirovic, a Senior Research Fellow at the Oxford Institute for Energy Studies and former oil trader, said in a report published by Reuters that he is surprised the price has not jumped to $130 per barrel already. One reason could be that simmering tensions for the past months already contributed up to $10 a barrel to recent price increases.

But on Friday prices that had spiked above $100 a barrel retreated, signaling some reassurance that the West does not intent to sanction Russian energy supplies. Half of Russia’s crude oil exports, 2.3 million barrels a day go to the West.

Russia supplies ten percent of the world’s oil and is the second largest natural gas producer after the United States. Europe depends on Russia for close to 40 percent of its natural gas consumption.

President Joe Biden signaled on Thursday that he may release more supplies from strategic reserves in coordination with other countries, to address any shortfalls.

Analysts also raise the possibility of a nuclear agreement between Iran and the United States that could end Washington’s oil export sanctions on Tehran and help control prices. But Iran has little extra capacity, which is already not being utilized and exported. However, Imsirovic noted that Tehran has stockpiled 80 million barrels on tankers at sea that could be an immediate partial help.

An agreement between the US and Iran, however, remains uncertain as signals indicate Tehran insists on its tough conditions and US says “serious issues” remain unresolved. Statements by Iranian officials have not signaled of a softening of their position. Tehran still demands more US sanctions to be lifted and on Friday its nuclear chief said the country will continue to enrich uranium at 20 percent, even if sanctions are lifted.

It is not clear if Washington will make more concessions at this point, although the need to increase oil supplies looms large when the United States is confronting rising inflation.

Saudi Arabia and other Middle East producers could try to increase output too. Analysts are not sure whether low production by the Saudis is intentional or the result of technical limitations. The kingdom reduced output in 2020 when demand slumped with the pandemic. Some say that it is not easy to revive reduced production. But if Riyadh is holding back production that could also be related to Iran.

Saudi Arabia is not thrilled by the Biden Administration’s attempts to reach a nuclear deal with Iran, which many see as a weak arrangement that would not prevent Tehran from getting close to producing nuclear weapons. Many regional countries see the specter of a nuclear Iran as a serious threat to their security.

There is also the issue of Tehran’s support for Yemen’s Houthi rebels that fight a Saudi-led coalition that intervened in the country to support the internationally recognized government.

Source: Iran Intl.

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What is the Future of European Energy Under the Russia-Ukraine Crisis

The conflict between Russia and Ukraine has intensified, and the United States and Europe have also imposed a series of severe sanctions on Russia. In the context of increasingly severe global inflation, global energy prices continue to soar, and geopolitical uncertainty has made the energy outlook more confusing.

The U.S., EU Impose SWIFT Sanctions on Russia

Last weekend, the United States and Europe escalated sanctions against Russia again. The European Union, the United States, the United Kingdom, and Canada announced that some Russian banks would be excluded from the Society for Worldwide Interbank Financial Communication (SWIFT) payment system, and restrictions were imposed on the Russian central bank to prevent its allocation of international foreign exchange reserves to weaken the impact of sanctions.

What is the Future of European Energy Under the Russia-Ukraine Crisis _1

In the long run, Russia after being excluded from SWIFT may be financially isolated, or even "economically isolated". International payment settlements between the ruble and the euro, the dollar as well as other currencies cannot be carried out. Cross-border trade and capital flows will be greatly hindered. It will also be a huge blow to the Russian economy.

Against the background of current high oil prices, soaring natural gas prices, and explosive inflation in Europe and the United States. The United States and Europe have resorted to SWIFT to exclude Russia from this international settlement and payment system, which will undoubtedly be serious economic damage to European countries that rely heavily on Russian oil and gas exports.

Europe has been mired in several rounds of energy crises over the past year, while the conflict between Russia and Ukraine has heightened concerns about disruptions to Russia's energy supply, and the United States has supplied an increasing number of natural gas orders to Europe. The U.S. liquified natural gas (LNG) exports to Europe in January 2022 nearly doubled from November last year, according to U.S. Energy Information Administration data. Europe's LNG import capacity is constrained by infrastructure conditions despite the U.S. increasing LNG ships to Europe. The natural gas regasification capacity is difficult to improve in the short term, and the compensation for natural gas supply is still limited.

Data show that in 2021, Russia's pipeline natural gas to Europe accounts for 35% of Europe's total imports, and Russia's crude oil exports account for 29% of Europe's total imports. The European natural gas inventory index fell to around 31% in February 2022, a record low in the past five years. It can be seen that in terms of energy supply, Europe may be inseparable from Russia in a short period.

Fortunately, however, despite further severe sanctions on Russia, the United States reiterated that it will not impose sanctions on Russia's energy exports to avoid affecting American and European consumers as much as possible. The U.S. State Department's senior energy security adviser, Amos Hochstein, said the latter sanctions would also not target Russia's oil and gas industry and Russia's energy agency, as that might halve sales of Russian energy products but could double prices. Given the high inflationary pressures that the U.S. and Europe are currently facing, they do not want to see high energy prices threatening consumption and economic recovery.

Germany Calls Off Nord Stream-2 Gas Pipeline Project

In November last year, the completed Nord Stream-2 natural gas pipeline project was suspended by Germany because it did not comply with European laws. As the crisis between Russia and Ukraine intensified, the United States and Europe increased sanctions against Russia. The project was also called off again.

What is the Future of European Energy Under the Russia-Ukraine Crisis _2

The Nord Stream-2 project is a major natural gas pipeline directly from Russia to Germany. Germany's suspension of the project is not to give up, but to conduct risk investigation and ensure Germany's energy sovereignty and security. The disagreement between Germany and Russia is how to ensure compliance with the project's pipeline network separation, transparency, and capacity sharing principles, preventing the project from being influenced by Gazprom's monopoly.

Being in the "vanguard" of sanctions against Russia, the United States has always opposed the Nord Stream-2 and has been promoting the "Russian threat theory" within Europe. Concerns and accusations about Russia's use of energy as a geopolitical weapon have emerged one after another. It is pressuring Germany and the EU to stop Nord Stream-2 project.

In Europe, Poland, Lithuania, Ukraine, etc. requested Germany to use the Nord Stream-2 project as a means of putting pressure on Russia, mainly to protect Ukraine's commitment to energy transit rights. Once the Nord Stream-2 project is delayed or abandoned, it can be guaranteed Russia is sending gas volumes via the Yamal-Europe pipeline in Ukraine or Poland to appease its allies.

At present, under the circumstance that the Ukrainian crisis may continue to worsen, the Nord Stream-2 project may still face the possibility of complete abortion. The best outcome is that in time, when the crisis in Ukraine and the relationship between Russia and Europe are eased, Germany will restart the certification of the project for national interests.

Although the European energy market still faces the risk of interruption of the Russian energy supply, the phenomenon of energy shortage may improve as the weather gradually warms and Europe increases energy supply from imported sources such as the United States and the Middle East.

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Devin

Many of us, myself included, did not imagine that the crisis in Ukraine would come to this.

Born after the Second World War, I — like many other Europeans — grew up in peace, far from hostilities. The idea of a war on the outskirts of Europe seemed impossible, yet that is what is happening here and now. French President Emmanuel Macron has announced that it could last a while, but I am not so sure.

The responses in support of Ukraine are numerous, but no country has yet decided to send troops to back it up on the front line. France has volunteered to send 500 soldiers to Romania as part of NATO missions, but this is hundreds of kilometers from the Ukrainian border.

The EU immediately imposed very severe financial sanctions, although measures to at least partially exclude Russia from the SWIFT international banking exchange system took time to be agreed. Several member states initially held back the implementation of this measure for fear of the economic consequences on themselves. International bodies, including NATO and the Council of Europe, have increased their consultations and emergency meetings.

The forces of Vladimir Putin, the master of the Kremlin, continued steadily on their way to Kyiv amid all this opposition.

At a UN meeting last week, Abdulaziz Alateek, Saudi Arabia’s permanent representative to the organization, spoke on behalf of the Gulf Cooperation Council and recalled Security Council Resolution 2202, which was adopted unanimously in 2015, and called for de-escalation.

The first matter that comes to mind is obviously that of peace and security in Europe. Could the Gulf states play a role in building this peace? This is not a rhetorical question and the answer is yes. In the event of Russia failing to supply gas to Europe, the Gulf and the US would become our main sources.

The Ukraine crisis is leading Europe to rethink its energy strategy and find other gas suppliers at reasonable prices, which shale gas from the US does not allow (and which, by the way, is an ecological disaster). Saudi Arabia, the UAE and Qatar, which are already present on the European market, will therefore be our doubly privileged partners.

For a while, it seemed obvious that Gulf support for Ukraine would have been immediate, but the situation seems to have changed in recent years. The UAE’s abstention on the UN Security Council’s resolution on Saturday was interpreted by some as a lack of support for an international condemnation initiative. I do not see it as such. To abstain is also to take a stand.

The UAE is an essential player in 21st-century diplomacy. The country, fortified by the Abraham Accords, uses committed but cautious diplomacy, mindful of regional and international balances.

Saudi Arabia, meanwhile, is engaged in a modernization plan and is showing unprecedented openness to the world. It has been looking to diversify its alliances since the war in Iraq.

The decision to host a French military base in Abu Dhabi is clear proof of the Gulf’s strategy and shows an informed and relevant choice.

The erratic and unpredictable policies of the US, as exemplified by its unilateral decision to withdraw from Afghanistan, have sown doubts among its historical allies in the Gulf.

The UAE, like Saudi Arabia and Qatar, knows that the Gulf is the surest alternative for Europe’s energy supply.

At the same time, relations within OPEC+ call for the utmost caution and skill. The global economy is largely based on the agreements or disagreements of its members, including Russia.

An OPEC+ meeting is scheduled for March 2 and it seems to me that the UAE’s caution at the UNSC was welcome. Abstention does not mean that the UAE supports Russia’s military operation.

It is obvious that diplomatic stances are impacted by energy policies, particularly where it is impossible and would be irresponsible to act alone. In fact, the global economy’s survival is in the hands of these friendly countries. Following the pandemic, an uncontrolled rise in gas prices would be deadly for the global economy.

The Gulf states, with the UAE taking the lead, are therefore essential partners that play a major role in the global economy in their capacity as leading allies in international diplomacy.

Ukrainian President Volodymyr Zelensky has requested Israel’s mediation in the conflict with Russia. Israel is now an ally of the UAE, which is why Abu Dhabi can play an eminent role in mediating this conflict in Europe — in addition to being a reliable ally.

Source: Arab News. Author: Nathalie Goulet.

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1. Fundamentals

46.8% of the EU's natural gas and 40% of the palladium in the fuel vehicle exhaust catalyst come from Russia, of which the Russian company Nornickel is the main producer of palladium and platinum, both of which are catalytic converters used to purify vehicle exhaust.

Russia produced 2.6 million troy ounces of palladium last year, or 40 percent of global production, and 641,000 ounces of platinum, about 10 percent of global production.

In addition, on February 26, US time, the White House announced a joint statement by the leaders of the EU, the US, and Canada, deciding to ensure that selected Russian banks are removed from the information system of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) (not all Russian banks registered with SWIFT will be removed), which can cause problems in the settlement of imports and exports of Russian products.

2. Technical Side

2.1 Palladium Monthly Chart

In the palladium monthly chart, there are multi-sided increments. When the K-line is bove the middle rail of the Bollinger Bands, it indicates that the general trend is to go long.

2.2 Palladium Weekly Chart

In the palladium weekly chart, there are long positions. In this week, there is bullish news. However, it closed with a golden cross last week, indicating that there will be a short-term price retracement this week, which is suitable for buying on dips.

2.3 Palladium 4H Chart

In the four-hour chart of palladium, the long market makers and the long hot money entered the market. The moving average is unilateral, indicating that the intraday trend is going long.

Today's business direction: going long;

entry point: current price;

Take profit at 2612.5;

Stop loss at 2363.

Conclusion

European and American countries have launched a series of sanctions against Russia, which may weaken the liquidity of Russian companies' financing and raw material import and export, and the supply of palladium will be greatly tightened, and the price will continue to strengthen. On the other hand, the deletion of Russian banks from the information system of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) (not all Russian banks registered with SWIFT) will bring a lot of trouble to the import and export settlement of Russian products. Today's business direction: going long; entry point: current price; take profit at 2612.5; stop loss at 2363.

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UAE's total non-oil foreign trade approaches AED 1.9 trillion

The total value of the UAE’s non-oil foreign trade in 2021 amounted to nearly AED 1.9 trillion, reflecting a 27 percent growth compared to 2020, and by 11 percent compared to 2019, as the growth was consistent across all areas of trade, including exports, imports and re-exports.

The individual non-oil foreign trade figures of all emirates of the country also witnessed growth in varying levels, evidencing the comprehensive growth achieved by the UAE’s global trade.

The value of national non-oil exports amounted to about AED 354 billion, setting a new record, exceeding AED 300 billion for the first time in its history, a growth of 33.3 percent as compared to 2020 and 47.3 percent as compared to 2019.

Abdulla Bin Touq Al Marri, UAE Economy Minister, affirmed that the country’s non-oil foreign trade performance once again proves that the UAE, thanks to the support and directives of its wise leadership, is among the most vibrant trade and business hubs regionally, and the leading trade routes globally. He added that the comprehensive growth in the country's trade is a result of the forward-looking vision of the UAE’s wise leadership and proactive government policies to enhance the country's commercial attractiveness and diversify and expand its trade partnerships with global markets.

He added, "The UAE's foreign trade has by far passed the stage of recovery from the COVID-19 fallout on a global scale and has entered an advanced stage of growth and prosperity, as it saw over 11 percent growth compared to the pre-pandemic stage. The all-encompassing positive results seen across import, export and re-export activities in all the emirates indicate a systematic and integrated growth powered by flexible and highly efficient trade policies and foundations for sustainable development."

Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, noted that the non-oil foreign trade data recorded in 2021 is a new milestone for this vital sector, which is a major driver of the growth of the national economy and one of the key pillars that support the UAE's position in the trade and economic landscapes, both regionally and globally.

He added, "Thanks to the support of the wise leadership, the past two years have witnessed good growth rates in trade activities, which are taking a more positive trend today, reflecting the increasing growth in the country's foreign trade movement in general and the promotion of national non-oil exports in particular, which is still continuing its growing at high rates compared to 2019 and 2020."

He added, "These results are driven by the launch of the Projects of the 50 and the continuous efforts being made to enhance the UAE's position on the international trade map and ensure an attractive, vibrant trade environment that is open to the world and linked to a strong and diverse network of global supply chains. These efforts have laid solid foundations to sustain the growth of the country's foreign trade over the coming years. There is no doubt that these results will further enhance confidence among UAE-based business owners and those working in economic and commercial fields in , as well as trading partners from around the world, in the importance of the UAE as a capital of trade. They also highlight the UAE's capabilities and the opportunities it offers to ensure that commercial activities and businesses thrive."

Trade figures for 2021 showed that the total value of re-exports amounted to AED 521.3 billion, achieving a growth of 27.7 percent compared to 2020 and 1.6 percent compared to 2019. Meanwhile, the total value of the country's imports during 2021 amounted to about AED 1 trillion, a growth of 23.8 percent as compared to 2020, and about 7 percent compared to 2019.

China ranked first as the country's largest trading partner in 2021, accounting for 11.7 percent of the UAE's total foreign trade with the world, and the value of non-oil trade exchange between the two countries amounted to AED 212 billion, a growth of 27 percent from 2020 and 19.8 percent from 2019. India ranked second, accounting for 8.7 percent of the country's total non-oil trade, with a value of AED 164.4 billion, followed by Saudi Arabia in third with a contribution of 6.6 percent and a value of 125 billion during 2021, achieving a growth of 20 percent compared to 2020 and 10.1 percent compared to 2019. The United States of America came in fourth, as its trade exchange with the UAE has grown by 8.1 percent compared to 2020, while Iraq ranked fifth.

About the country's export destinations, India emerged as the top destination, accounting for 13.8 percent of the country's total exports, and receiving AED 50 billion of UAE exports, a growth of 150 percent from 2020 and about 100 percent from 2019. KSA became second largest recipient of UAE exports, with a contribution of 10.7 percent. It received AED 38 billion of the country's exports, achieving a growth of 48 percent compared to 2020 and by 22.4 percent compared to 2019.

Source: WAM.

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