Overnight, spot gold staged a "high platform diving" market after the surge, with the highest touch of $1974.32 and the lowest touch of $1880.15, and finally closed at $1903.90. Gold rose slightly in early Asian trading today and is currently hovering around $1914. In addition to gold, financial markets such as US stocks and crude oil have experienced strong fluctuations.
The trigger for the above fluctuations is the situation in Russia and Ukraine.
The war between Russia and Ukraine has escalated, and the US stock market has reversed and soared
In my lifetime, you and I have witnessed history again. War struck like lightning, and the whole world was caught off guard.
After the declaration of war, Russian troops reportedly launched an attack on Ukraine's navy, air force and important military bases. In about an hour, the Ukrainian navy and air force were completely wiped out, and the air defense system was mostly destroyed.
So far, the Russian side said it had destroyed 74 military targets on the ukrainian ground. In addition, Russia takes control of the Chernobyl nuclear facility.
In fact, after the start of the war, the White House has repeatedly stated that it will not send troops to Ukraine, but the market is still worried that the United States will confront Russia in Ukraine. Unexpectedly, last night, after Biden's speech and shot, he basically dispelled this concern, and the US stock market achieved a big reversal!
Overnight, Biden announced that the U.S.-led G7 had unanimously agreed to impose "devastating sanctions" on Russia. The sanctions include restricting Russia's ability to conduct international transactions in dollars, yen and euros, freezing all U.S. assets, including VTB assets of Russia's second-largest bank. At present, in addition to US sanctions, the EU side is brewing a major sanctions package. Another piece of information: UEFA will cancel the Hosting of the Champions League Final in St. Petersburg, Russia.
You should know that the US stock market originally fell very badly, but after Biden's speech, the three major stock indexes quickly rose in the tail. The Dow rose to 33269.34 at one point in the end of the session, a sharp pull of 997 points compared to the intraday low of 32272.64 points. The NASDAQ originally fell nearly 3% intraday, but rose more than 3% at the end of the session.
As of the close, the Dow jones was up 0.28 percent at 33,223.83; the S&P 500 was up 1.50 percent at 4,288.70; and the NASDAQ was up 3.34 percent at 13,473.58.
This has only happened three times in the four-decade history of S&P Futures: July 24, 2002, September 16, 2008, and February 24, 2022 (last night).
Careful observation, the first two times this situation occurred, the US stock market has been deeply in a bear market, the US economy is in a deep recession. In 2002, U.S. stocks then experienced two retracements to the same depth in October 2002 and 2003, and the U.S. economy emerged from recession before finally reversing. In 2008, when Lehman collapsed, U.S. stocks rebounded for a day and then continued to fall by 50% until the Fed's first quantitative easing was launched.
Therefore, last night's historic reversal in US stocks, although once in decades, was more like a bear market rally. After all, the NASDAQ large cap index had plunged 20% before the rally, entering a bear market.
At the same time that the U.S. stock market reversed, other markets also began to reverse.
First, gold plunged nearly $100 (or even closed down) from intraday highs.
Source: Golden Investment Network APP
The data shows that gold has encountered three waves of fierce sell-offs in a short period of time:
COMEX's most active gold futures contract on February 25, 03:09 Beijing time within one minute to instantly trade 2038 lots, the total value of the contract is 389 million US dollars;
COMEX's most active gold futures contract on February 25, 03:20 Beijing time instantly traded 2221 lots in one minute, with a total trading contract value of $421 million;
COMEX's most active gold futures contract on February 25, 03:27 Beijing time within a minute to instantly trade 3075 lots, the total value of the contract is 580 million US dollars.
Second, U.S. crude futures, which touched $100 during the session, plunged $8 (achieving only a slight gain), and Brent crude futures, which touched $105 during the session, closed with only a slight increase.
It can be said that in just one night, the trend of the whole day was reversed. People panic in a day, and the market reverses in one night.
Some people say that Russia and the occupation of Ukraine, the crisis is lifted, but it is not, because next, Russia faces cruel sanctions. Because in the eyes of the West, this matter is similar to the nature of Saddam's previous invasion of Kuwait, and the word "invasion" is used, which is very heavy, Saddam Hussein also has a huge amount of oil fields, and after some years of sanctions, he is very poor.
As for the Russian economy, just look at a map, the following chart is Russia's GDP trend in the past three decades:
It can be seen that after the collapse of the Soviet Union, Russia experienced a "dark decade", bottoming out from 1998, coming out of a long bull for 15 years (the decline in the middle was the subprime mortgage crisis), and then reaching its peak in 2013.
After the Crimea in 2014 turned to the downside, the more chaotic and miserable, until The President of Sichuan has been targeting China in those years, and even wants to win over Russia, and in those years, the Russian economy rested and recuperated, and it came out of a rebound.
How does the gold market go?
Fundamentals
Referring to the impact of the events in Georgia in 2008 and crimea in 2014, we believe that the Russian-Ukrainian conflict has entered a climax; unless the United States and Europe directly send troops to participate, the current round of Russian-Ukrainian conflicts will enter the final stage, and financial markets will gradually return to fundamentals from the short-term crisis shock. However, the Russian-Ukrainian conflict has changed the geopolitical landscape in Europe, and Russian-Ukrainian relations and Russian-European relations will be more tense than ever.
At present, gold in the Russian-Ukrainian conflict brought about by the short-term safe-haven demand, the european and American inflation deterioration brought about by the medium-term anti-inflation demand and the long-term safe-haven demand brought about by the european and American recession expectations, has overcome the fed tightening and the rise in the US treasury interest rate caused by the bearish impact and entered the medium-term upward trend, if the gold price due to the easing of the Russian-Ukrainian conflict in the later period and a short-term correction, will be another opportunity to intervene in gold in the medium and long term.