Huitong News - During the Asian session on February 25, spot gold rose slightly, trading above 1900. Gold prices surged sharply higher on Thursday, rising as high as 1974, a new high since September 2020, but after Biden imposed weaker-than-expected sanctions on Russia, gold prices profited from all gains. The US PCE price index for January, the Fed's favorite inflation indicator for the day, will be released.
Spot gold edged higher during the Asian session on Friday (February 25), trading above 1900. On Thursday (February 24), gold prices soared sharply, rising as high as 1974, hitting a new high since September 2020, the Russo-Ukrainian war is still ongoing, the market risk aversion is still strong, but after Biden imposed weaker-than-expected sanctions on Russia, gold prices profited back all gains.
Intraday focus will remain on the Russo-Ukrainian war, and the US PCE price index for January, the Fed's preferred inflation indicator, will also be released.
Fundamentals are bullish
【Kiev material fell in a few hours】
A senior Western intelligence official predicts that the Ukrainian army's air defenses have been largely destroyed, and that Russian troops may capture Kiev tonight.
The official said the Russians were now advancing deep into Ukraine along the banks of the Dnieper River, and that the capture of the capital appeared to have been in the pocket. The Russians also controlled several airfields that could be used to increase troops to Ukraine.
The official said that although military operations are still concentrated in the eastern, southern and central parts of the country, it is believed that Russian President Vladimir Putin's combat goal is to control all of Ukraine. Moscow's end is expected to overthrow the current government in Kiev and establish a pro-Russian puppet regime.
Ukrainian President Zelenskiy vowed to defend the motherland and stood firm in the capital with his government. The official said the ancient city of 3 million people could have been subjected to extreme violence during the Russian seizure of Kiev.
A U.S. defense official told reporters that the Russian military dispatched 75 heavy and medium bombers and fired more than 100 missiles of various types in the first wave of strikes against Ukraine.
Ukraine's State Border Service said its forces were attacked at 5 a.m. local time on the northeastern border, in Donbass and in five oblasts along the occupied Crimea.
Russian tanks reportedly arrived in the early morning on the outskirts of Kharkov, Ukraine's second city, and engaged the Ukrainians at Kherson, near northern Crimea. CNN footage shows that shortly after the afternoon, Russians captured Hostomel airfield on the outskirts of Kiev.
Mykhaylo Podolyak, Zelenskiy's adviser, said the Russians had built a defensive line at the airport and were preparing to use it as a bridgehead for the decapitation operation. "There may be airborne airborne troops. It is possible to attack government buildings," Podolyak said, "and one of the goals is to overthrow the supreme authorities." ”
Ukraine, whose military and defense spending could not be compared to Russia's, said it shot down Russian warplanes and destroyed some tanks, and remained on the long eastern front. The Russian Defense Ministry said it had destroyed 74 Ukrainian military installations, including 11 airfields, 3 command posts, a naval base and 18 anti-aircraft radar stations.
[Fed officials are more worried about inflation than the situation in Ukraine]
While Russia's attack on Ukraine has cast a layer of uncertainty over the global economic outlook, Fed officials have hinted that they are still on track to raise interest rates next month.
Fed officials acknowledge the risks posed by the Russian-Ukrainian conflict, but also stress the need to deal with the worst inflation in the United States in 40 years.
Cleveland Fed President Mester said Thursday: "Unless there is an unexpected shift in the economy, I think it would be appropriate to raise the federal funds rate in March and raise it further in the coming months." ”
"The impact of developments in Ukraine on the medium-term economic outlook for the United States will also be a factor in determining how soon it is appropriate to withdraw from the easing," she said.
Before Russia attacked Ukraine, Fed officials had strongly hinted at their readiness to raise rates at the March 15-16 meeting to combat inflation, while being open about the magnitude or speed of action after the first rate hike.
Meister's views were echoed by Atlanta Fed President Bostic. He said he still expects rate hikes in March if the economy develops as he expected.
"If the numbers are close to what I expected, we can move on with our first rate hike plans," he said at the Atlanta Fed's Banking Outlook meeting, "we just need to keep an eye on developments." I know that we've seen a big rise in oil prices over the past few weeks, as has natural gas. This can have a knock-on effect. ”
Traders and economists alike believe the Fed will start raising rates in March, although geopolitical risks reduce the likelihood of a 50 basis points at a time.
[Ukraine under full-scale attack; West increases sanctions against Russia]
Ukrainian troops on Thursday confronted Russian attackers on three fronts after Russia launched its largest assault on a European country since World War II, causing tens of thousands of people to flee their homes.
After Russian President Vladimir Putin declared war in a pre-dawn televised address, kiev, a city of 3 million people, heard explosions and gunfire throughout the day.
The attack brought a disastrous end to the fruitless diplomatic efforts of Western leaders over the past few weeks to avoid war.
"This was a premeditated attack," Biden told reporters at the White House. Biden and his allies announced on Thursday tough new sanctions against Russian banks, oligarchs and state-owned enterprises.
"Putin chose this war. Now he and his country will bear the consequences. ”
In his speech, Putin said he had ordered "special military operations" to protect people who suffered "genocide" in Ukraine, including Russian citizens. The West calls such allegations nonsense.
Putin said: "To this end, we will strive to achieve the demilitarization and de-Nazismization of Ukraine." ”
By night, fierce fighting broke out on several fronts.
An adviser to Ukraine's president's office said Russian troops had captured the abandoned Chernobyl nuclear power plant, which is just about 90 kilometers (60 miles) north of the capital. Fighting also took place at Hostomel airfield outside Kiev, where paratroopers landed. A Ukrainian official later said the airport had been recaptured.
Fierce exchanges of fire were also reported in the Sumy and Kharkiv regions of the northeast and the Kherson region in the south.
Five lanes of the highway west from Kiev were blocked by vehicles, and people fleeing fear of bombing were stuck in the formation.
The U.N. refugee agency said an estimated 100,000 Ukrainians had fled their homes. Thousands of people are entering neighboring countries such as Romania, Moldova, Poland and Hungary.
【Gold ETF holdings on 24 February: SPDR gold holdings increased by 5.23t】
Gold ETFs data from February 25 showed that as of February 24, the world's largest gold-backed ETF, SPDR Gold Trust, had a gold holding of 1024.09t, an increase of 5.23t from the previous trading day.
[The US dollar hit the highest in the past two years, and Russia attacked Ukraine to promote safe-haven buying]
The dollar jumped to its highest in nearly two years on Thursday, the Russian ruble hit a record low and investors fled risk assets to safe-haven assets after Russia attacked Ukraine.
Russian troops launched an all-out assault on Ukraine from land, sea and air, the largest attack on a European country since World War II.
The dollar index rose 0.91 percent, on track to record its biggest one-day percentage gain since March 2020, when the U.S. market was hit by the first wave of COVID-19. The dollar hit 97.74 against a basket of currencies, the highest since June 30, 2020.
(USD Index Daily Chart)
The dollar softened slightly as U.S. President Joe Biden announced new sanctions against Russia, including banks.
Silver Gold Bull Inc． Erik Bregar, director of risk management for forex and precious metals, said: "This is a major geopolitical dynamic that many people have never seen in their lifetime; it's a classic safe-haven operation. A tug-of-war on which currency is currently the largest safe-haven asset. ”
The Russian ruble plunged 4.51 percent against the dollar to 84.96 rubles, a little earlier at a record low of 89.986.
Fundamentals are bearish
【Technology stocks lead the stock market to close up】
U.S. stocks recovered and turned higher after a sharp fall on Thursday, as investors flocked to big U.S. tech stocks for safe-haven, and the pullback in oil prices eased fears that Russia's attack on Ukraine could lead to an immediate deterioration in inflation.
The S&P 500 rose 1.5 percent, the Nasdaq 100 rose 3.34 percent, and the Dow Jones Industrial Average rose 0.28 percent after the conflict between Ukraine and Russia cast a shadow over global markets and left the index teetering on the edge of a pullback zone.
(NASDAQ Daily Chart)
The Stoxx Europe 600 fell 3.3 percent, with Russian stocks taking the biggest drop on record.
This year has been tense, Russia's attack on Ukraine has been even worse, investors' first reaction is to sell, but then ask questions," said Ryan Detrick, chief market strategist at LPL Financial. "But it's important to know that major geopolitical events used to be usually short-term market issues, especially when the economic foundations are solid."
The Russian-Ukrainian conflict poses the threat of disrupting global raw material and food costs. Russia is an important commodity exporter, while Ukraine is also important in the grain export market. Earlier on Thursday, European natural gas prices surged 62 percent, as did metal prices, exacerbating the inflation threat.
[U.S. Jobless Claims Fell to 52-Year Low Last Week]
U.S. jobless claims fell slightly more than expected last week, suggesting increased momentum for the labor market recovery.
The Labor Department's weekly initial jobless claims report released Thursday also showed claims falling to their lowest level since 1970, underscoring tighter supply in the labor market. Workers are severely short, job openings are near record highs and layoffs are at their lowest levels.
"In addition to weekly changes, the downward trend in claims continues as virus-related disruptions continue to dissipate and businesses resume more normal operations," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. ”
For the week ended February 19, initial jobless claims fell by 17,000 to a seasonally adjusted 232,000. That nearly reversed the sharp upward trend of the previous week, with economists blaming the previous week's surge on weekly fluctuations in data and the delayed impact of winter storms earlier in the month.
Economists had previously forecast that initial jobless claims were expected at 235,000 last week. Last week, the number of unadjusted jobless claims plunged 24,824 to 214,873.
With 10.9 million jobs vacant at the end of December, the number of jobless claims could fall back to below 200,000 in the coming weeks. The last time it was below this level was in early December.
Initial jobless claims fell sharply from the record high of 6.149 million set in early April 2020. In the week ended February 12, the number of jobless claims decreased by 112,000 to 1,476,000, the lowest since March 14, 1970.
The decline in claims for unemployment benefits also suggests that some previously unemployed Americans are returning to the workforce, which could help alleviate labor shortages.
【U.S. Economic Growth Accelerates in The Fourth Quarter】
A separate report released thursday by the Commerce Department confirmed that economic growth accelerated in the fourth quarter as the drag on the summer Delta variant fueled the outbreak to fight back has eased.
U.S. gross domestic product (GDP) revised to 7.0% yo-yo growth in the fourth quarter versus 6.9% in the previous quarter. The economy grew at 2.3 percent in the third quarter. Economic growth in 2021 was 5.7 percent, the best annual performance since 1984.
The revised FOURTH-quarter GDP reflects that businesses are spending more on equipment and investing in housing construction than initially expected.
However, another report showed that new home sales fell 4.5% in January, at a seasonally adjusted annual rate of 801,000 households, but the housing market was still supported by strong demand amid a severe shortage of housing supply.
(Spot Gold Daily Chart)
In general, the current capital market is still focusing on the development of the situation in Russia and Ukraine, and gold prices may rise again at any time, but the volatility may be large, which increases the difficulty of operation, and investors need to be psychologically prepared.
At 8:54 Beijing time, spot gold was quoted at $1911.90 an ounce.
Original title: The Ukrainian capital is expected to fall, and gold bulls are ready to go! Follow the US PCE Index
Source: Huitong Network