Gains in equities reversed on Thursday, but industrial metals traded south, and crude oil cheapened despite a tense geopolitical environment, as the worries that such a spike in energy and commodity prices would certainly curb the economic growth and slow the global demand took over the worries of a tighter supply.

The central banks are increasingly concerned about inflation, and the major ones start giving out signals that they won’t let inflation run too hot, even if it means a slower growth. Christine Lagarde announced on Thursday that the ECB is ready to take ‘whatever action is needed to pursue price stability and to safeguard financial stability’ in Europe.

Inflation in the US advanced to 7.9% in February as expected, and that number doesn’t even take into account the latest surge in energy and commodity prices due to the Ukrainian war.

In commodities, the upside potential in gold is more than just a safe haven hedge, as the rising geopolitical tensions and the latest sanctions imposed on the Russian central bank will bring the central banks around the world to reconsider their FX holdings, and start shifting towards a nationless gold.

The price of an ounce eased below the $2000 mark, yet the price pullbacks could be seen as interesting buying opportunities for those who bet that it’s time for gold to shine again.

Inequities, the high market volatility and limited visibility makes it hard to give a clear prediction yet the Chinese stocks continue suffering badly, as the prospects are getting worse by the day.

 

This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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