Gold trading reminder: The United States sanctions Russia, and gold prices retreat to 1900 in a tug-of-war

Spot gold held steady around 1900 during the Asian session on Wednesday (February 23). On Tuesday (February 22), the gold price high volatility held steady, investors assessed the further development of the Russian-Ukrainian crisis, the West may impose severe sanctions on Russia, investors were nervous, and US stocks fell. At the same time, the consumer confidence index fell to a five-month low. However, the U.S. manufacturing PMI performed well in February.

The main focus of the day was on the speeches of Fed officials.

Fundamentals are bullish

[The United States announced sanctions against Russia, and the S&P 500 index entered a correction range]

U.S. stocks entered a technical correction on Tuesday as investors weighed the consequences of escalating tensions in Ukraine and U.S. President Joe Biden's announcement of sanctions against Russia.

The benchmark S&P 500 fell for the third straight day, closing down 1%. The index is now down more than 10 percent from the record closing highs reached in January; the S&P 11 major sectors are down across the board, led by consumer discretionary and energy sectors; the NASDAQ 100 is down 1 percent and the Dow Jones is down 1.4 percent.

Stocks were initially volatile on Tuesday, with some market watchers saying Russia's recognition of two self-appointed separatist republics in eastern Ukraine was far less than the worst-case scenario investors feared. However, the general market decline intensified ahead of Biden's announcement of sanctions in the afternoon, and investors became increasingly worried that the sanctions would worsen the global supply chain crisis.

"Russia recognizes the independence of these two regions and deploys troops there, which is not the kind of invasion that the market fears," wrote Tom Essaye, founder of Sevens Report communications. However, while the crisis will continue to dominate the market until the situation becomes clear, Essaye said fed policy and economic growth have a greater long-term impact on the market.

Strategists also said that the Russian-Ukrainian conflict and the reaction of the West will largely determine the fate of the market this week.

[U.S. Consumer Confidence Index Falls to Five-Month Low]

The U.S. consumer confidence index fell to its lowest level since September in February, as consumer expectations for economic growth and financial prospects slipped as inflation hit a multi-decade high.

A report released tuesday by the World's Large Companies Research Institute showed that the consumer confidence index fell to 110.5, and the previous month's data was revised down to 111.1. Economists surveyed by Bloomberg had previously expected 110.

Americans are experiencing the highest inflation since the early 1980s, with prices rising far faster than wage growth. Russia's conflict with Ukraine could further damage consumer confidence, especially if gasoline prices continue to rise. In addition, soaring mortgage rates have also increased mortgage pressure.

The consumer expectations index fell to 87.5, a five-month low. The current conditions index rose to 145.1.

Fears of inflation worsened in February, the World Research Council said.

The share of consumers whose income growth is expected to fall to their lowest level since January 2021 over the next six months. Purchase plans for cars, homes and appliances also decreased in February. The percentage of Americans scheduled to take vacations in the coming months has declined.

[Both high-level meetings between the United States and Russia were cancelled]

U.S. Secretary of State Blinken said Tuesday that he had canceled a planned meeting with Russian Foreign Minister Sergei Lavrov on Thursday after Moscow recognized the independence of two separatist regions of Ukraine.

Blinken told reporters after meeting Ukrainian Foreign Minister Dimytro Kuleba in Washington that he sent a letter to Lavrov on Tuesday informing him that he would no longer meet with him.

Blinken said: "Since we have seen the invasion has begun and Russia has made it clear that it rejects diplomacy in its entirety, there is no point in moving forward at this time." ”

He said the United States and its allies would continue to escalate sanctions if Russia further escalated its aggression against Ukraine.

The White House said a possible meeting between U.S. President Joe Biden and Russian President Vladimir Putin was "certainly" not an option at the moment.

"At this point, this is certainly not planned," White House spokesman Psaki said, adding that such a summit would need to be premised on easing the Russian-Ukrainian conflict.

[Canadian Prime Minister Trudeau announces the first round of economic sanctions against Russia]

Canadian Prime Minister Trudeau said Canada would impose the first round of economic sanctions on Russia. Previously, US President Biden has announced a series of sanctions against Russia.

Trudeau told reporters that Canadian nationals would be barred from buying Russian sovereign bonds and would be further barred from any financial transactions with the "so-called Luhansk and Donetsk Republics."

Canada will also sanction Russian lawmakers who voted in favour of recognizing the independence of Luhansk and Donetsk.

Trudeau said he would impose additional sanctions on Russian state-backed banks and prevent any financial transactions with them

Canada will authorize the deployment of up to 460 troops to NATO troops in Latvia and increase the deployment of a frigate and maritime patrol aircraft.

[Ministry of Foreign Affairs of Ukraine: Ukrainian-Russian relations have fallen to the bottom, and the proposal to sever diplomatic relations is deliberate and in the interests of Ukraine]

On February 22, Ukrainian Foreign Minister Culreba said that Ukraine's relations with Russia had fallen to the bottom and that ukraine's foreign ministry was waiting for the president's decision.

Ukraine should have made this decision as early as 2014, and the decision to sever diplomatic relations with Russia is timely, deliberate and in Ukraine's interest.

"Tonight, I signed a petition to the president of Ukraine proposing to sever diplomatic relations with Russia," he said. I believe, and I've always believed, that this should be done in 2014. Unfortunately, no such decision was made at the time. But now we have analysed all the possible consequences and scenarios for such a decision and have come to the conclusion that such a decision is timely, well-thought-out and in the interest of Ukraine. ”

Once the Ukrainian president makes a decision, the Ministry of Foreign Affairs will make a formal statement, which means that the relationship will break down. At the same time, Kureba revealed that the Ukrainian chargé d'affaires a.i. in Russia has returned to the country.

Fundamentals are bearish

[U.S. business activity rebounds in February, and price indicators of goods and services rise to the highest in more than a decade]

U.S. business activity rebounded from an 18-month low in early February, with the COVID-19 slowdown restoring momentum to demand and inflationary pressures intensifying.

IHS Markit reported on Tuesday that the composite purchasing managers' index initially rose 4.9 points to 56. Readings above 50 indicate an increase in industry activity.

The report shows that companies are passing on the rise in raw materials, transportation and labor costs. A measure of the prices of goods and services rose to its highest level since 2009, suggesting that the imbalance between supply and demand caused by the epidemic persists.

Chris Williamson, chief business economist at IHS Markit, said that "with economic growth rebounding sharply and price pressures rising again to all-time highs in the face of a recovery in demand, this survey will reinforce expectations that the Fed will be more aggressive in tightening monetary policy."

Overall, due to the rapidly changing situation in Russia and Ukraine, the trend of gold prices may be dominated by sharp shocks, but the fundamentals and technical aspects have a bullish basis, and holding above the 1900 line will help gold prices rise further.

This article originated from Huitong Network