Gold Hits $2,000

Morning Brief

The market has opened up in heavy risk-off mode as fear of further military escalation in the war between Russia and Ukraine starts to increase after President Putin said that anyway giving aid to Ukraine is “At war with Russia”.

Futures opened sharply lower, with gold briefly touching the $2,000 resistance mark earlier, and is consolidating near $1,990. US bond yields are also dragged lower, with 10-year Treasury yields sitting close to 1.70%.

The 2s-10s bond spread continues to hold rather narrow at around 24 basis points so that remains something to be wary about, as it generally is the start of the bond market flagging a coming recession.

Remember, traders live by two rules. Pay attention to the bond market when it starts to speak because it is usually correct, and discard moves in the foreign exchange market as it was generally less accurate.

As mentioned earlier, US futures are heavily in the red this Monday. Already, the S&P 500 futures are down 1.3%, Nasdaq futures are down 1.7%, and Dow Jones Industrial Average futures are down over 1.0%.

The risk of further bans against Russian oil has caused oil prices to skyrocket even more as traders also price in the diversification from Russian crude in general. WTI crude oil has hit $130.00 earlier and has settled back around $125.00.

In the foreign exchange market, the euro continues to sink lower as it resumes the downtrend from the end of last week. The EURUSD pair has hit its lowest level since April 2020 this morning.

The EUR/CHF is at parity, and traders will be on whether the SNB has the appetite to catch the falling knife. It could be time for the central bank to put a floor in if the move continues.

The British pound is doing better, and trades around the 1.3200 level, while the Aussie and kiwi are still the two surprise outperformers with both currencies up 0.6% against the dollar.

Bitcoin has opened up sharply lower as the narrative surrounding digital gold continues to unravel. The BTCUSD pair has briefly traded under the $38,000 support level already this morning.