XAUUSD This Past Week
XAUUSD has had two different moods this past week. We started off the week pretty bearish with XAUUSD following a downward trend. It went from highs in the early 1960s to lows reaching the 1900s. This was the lowest point this valuable commodity had seen in quite some time.
XAUUSD has reached the lower high area of the Descending triangle Pattern.
We really thought that it would break into the 1890s and continue further into a downward spiral. However, midway through the week, XAUUSD stood back up and started an upward trend in bullish market conditions. The main reason it was able to save itself from drowning further was that Russia and Ukraine had gotten themselves in a bigger argument at the time. We did not think there was any hope for these two to amend things but read on to find out the update on their latest talks.
Ukraine-Russia Peace Talks
Early on Tuesday, representatives from Ukraine and Russia had met in Istanbul to discuss some terms for a potential peace treaty to end the war. This was the first time both these countries sat down for a formal conference in two weeks. Earlier, analysts suggested that perhaps these conferences do more harm than good as it always ends with matters getting worse between the two countries.
However, this conference actually paved the way for some hope to end the war. Putin described the talks as meaningful as they ended with Russia agreeing to temporarily ceasefire in Ukraine while also withdrawing their troops from Mariupol and Kyiv. Zelensky also described the talks as hopeful but that they shouldn’t let their guard down as Russia is still not to be trusted. Zelensky believes Putin could still be bluffing in order to regain the support of the international community so they can lift some sanctions.
Lyudmyla Denisova, Ukrainian ombudswoman said in a statement regarding these events, “In Mariupol, the occupiers aimed at the building of the International Committee of the Red Cross (ICRC). Enemy aircraft and artillery fired on a building marked with a red cross on a white background, indicating the presence of wounded people or civilian or humanitarian cargo.” Alexander Fomin, Russia’s Deputy Defence Minister also added, “Russia would reduce the military activity radically by several times around Kyiv and Chernihiv. There is progress on the neutrality and non-nuclear status of Ukraine.”
Ukrainian President, Volodymyr Zelensky, had spoken out on this issue at hand. He states, “Ukrainians are not naive people. We can say that the signals are positive, but those signals do not drown out the explosions or Russian shells. We’ve only seen a small number begin to move away from Kyiv.” John Kirby, Pentagon spokesman also added stating, “The people should be prepared to watch for a major offensive against other areas of Ukraine. Russia will likely seek to divert combat power from the north to their offensive in the Donetsk and Luhansk regions in the east.”
Germany Gas Shortage
Not long ago, Russia declared its desire to be paid in Rubles rather than dollars or euros for the supply of oil and gas that it exports to other nations. Those who did not pay in this manner would soon suffer a scarcity in their supply of oil and gas. Germany is one of the countries that refuse to satisfy these requirements. They are on with their efforts to penalize Russia and locate a new oil supply. This will have a significant impact on Russia’s economy, but it will also have an impact on Germany’s economy until they find another source.
Analysts have been predicting how this is going to play out for Germany. They state, “In the first round, there would be targeted and announced shutdowns of specified individual large consumers, potentially for a long period. In the second round, the consumers of products from energy-intensive manufacturing would also be affected, i.e. the classic capital goods manufacturers (automotive, mechanical engineering, electrical engineering). Third-round effects would include job and income losses in the affected sectors. In addition, even higher energy prices and corresponding negative effects on disposable incomes would be expected. The savings ratio could rise for precautionary reasons and dampen private consumption.”
US Oil Reserve Shortage
At the EU Summits that were held last week, the United States agreed to supply the EU with oil and gas in order for them to stop taking their supply from Russia. The United States needed more sanctions to be placed on Russia such as banning the use of their energy resources as this would destroy their economy. Due to now providing the EU with more oil than ever before, the United States faces a shortage of its own oil reserves. This was the oil that they would use within their own states. They now have to recalculate how they’re going to provide for both the EU and themselves while still maintaining enough oil in their reserves in case of emergencies.
Whitehouse spokesperson had revealed in a statement regarding this problem, “The amount of the potential collective release has not been decided. That meeting will set a total volume, and per country allocations will follow.” Howie Lee, Economist at Singapore’s OCBC bank had revealed his thoughts on this ordeal as well. He states, “The immediate need is to fill the gap in the real economy, and releasing barrels from the SPR will alleviate that problem although it is effectively transferring the shortage from one pocket to the other.”
Looking at XAUUSD today, it is still in bullish market conditions but faces a small obstacle which is the peace talks which seem to be progressing successfully. This is the main reason why this valuable commodity is currently struggling to cross resistance levels.
XAUUSD has rebounded from the Major Descending channel and The market has reached the lor high area of the Falling Wedge Pattern.
XAUUSD is teasing around the early 1930s and it seems as though it may still choose to continue in its upwards trend but just with more caution than before. It may still fall slightly till the end of the day but the long-term plans for this commodity are being visualized higher up in the charts.