“Hot” Donbass war, what will gold price next week?

22/05/2022 07:31 GMT+7

Ukraine’s army is focusing on the Donbass war

This week, international gold prices had a positive recovery after 5 consecutive weeks of decline. Accordingly, the gold price increased from 1,786 USD/oz to 1,849 USD/oz and closed at 1,845 USD/oz.

In the Vietnamese gold market, the price of SJC gold bars also increased following the recovery of the international gold price when it increased from 68.9 million dong/tael to 69.7 million dong/tael.

The reason why gold price recovered strongly was due to the fear of a global economic recession increasing because the FED and some other central banks said they would continue to raise interest rates to control inflation; Russia-Ukraine war continues to escalate in the Donbass region, with US and Western sanctions pushing up prices of raw materials, fuel and materials; China remains steadfast in its zero-Covid policy, making the global supply chain disruption worse…

In fact, after US Q1 GDP growth was negative 1.4%, the country’s economic figures released this week were rather dismal, in which April retail sales increased only 0.9 %. % compared to the increase of 1.4% of the previous period; weekly jobless claims also increased to 210,000; Consumer confidence index declines…

Notably, the US 10-year bond yields are on a downward trend, showing that investors are also concerned that the Fed’s push to tighten monetary policy in the context of economic slowdown will push up The US economy fell into crisis.

Meanwhile, the Russia-Ukraine war became hotter and hotter after Russia claimed control of Mariupol, helping Russia gain Ukraine’s strategic seaport, creating a land corridor from the East to the Crimean peninsula. There are many signs that Russia is concentrating its forces to soon control the whole Donbass region. Russia is carrying out a major offensive against the last part of Ukraine’s territory in Luhansk, one of two breakaway provinces in the Donbass region. Although it is not easy for Russia to control the entire Donbass region in the short term, Western military circles do not dare to assert that this is beyond Russia’s control.

Notably, despite a lot of sanctions from the US and the West, Russia’s economy has not been exhausted as expected by the West. This may help Russia prolong the hostilities in Ukraine. However, many experts believe that the deeper into Ukraine’s territory, the more difficulties and “pitfalls” Russia will encounter, because now the Russian military has fallen into a passive position in this war.

The Donbass war heats up, which may support gold prices next week.

Mr. Colin, an independent foreign exchange analyst, said that the Donbass war will be increasingly fierce because the Ukrainian side has been counter-attacking strongly with the help of weapons and finance from the US and the West. The longer this war lasts, the more the US and the West will increase sanctions, especially when the recent sanctions are still sought to be resolved by Russia. This will further push up the prices of raw materials, materials, and materials, putting pressure on global inflation, possibly even pushing the global economy into recession. Against this backdrop, gold prices will benefit, as gold’s role as a haven will skyrocket.

“Although the recovery of gold price is not solid yet, because the USD is still high, the stock sell-off may cause investors to sell gold to add margin to maintain their investment position in securities. However, in the medium and long term, the price of gold is still increasing strongly,” said Mr. Colin.

According to technical analysis, the level of 1,850 USD/oz will be the important resistance level of gold price next week. If it breaks through and closes above this level, the price of gold next week will move towards $1,862/oz, followed by $1,885/oz. On the contrary, next week gold price will drop to 1,800-1,810 USD/oz, even 1,786 USD/oz before rising again.

According to DDDN