Russian troops return to bases, Stocks breathing!
Last night and earlier today we saw new multi months and years records high in Gold and Oil prices, while Market volatility also with VIX chart above 29.50 was telling us that haven bulls and Risky asset bears have a long way to go. However, a few hours ago, a report from Reuters changed the game, at least in the short term. Reuters had a report by "Russia says it returns some troops to base in areas near Ukraine" title. At the same time, Russian Foreign Minister Sergei Lavrov suggested on Monday that "Moscow should continue along the diplomatic path to resolve the tensions."
Right after the report, WTI fell under 91 before recovery, while last night was trading above $94. On the other hand, EU shares and US futures mostly gained 1.5% on average. US Dollar on the other hand also decreased and lost its safe-haven demand.
However, Russia Duma published a draft of a new law to recognize the breakaway republics in eastern Ukraine that were set up after Russia invaded in 2014. It can be a natural prelude to incorporating them into the Russian Federation, as it did with Crimea, as well as Abkhazia and Asteia states of Georgia, back in 2008. Therefore, tensions can continue and hold the pressure on the markets. Now we are waiting to see the results of the meeting of German Chancellor Olaf Scholz and Russian President Vladimir Putin. Can they stop the war machine or not, is the main question for now.
The market reaction in the Gold market can tell us what investors feel about the current situation. As we can see in the bellow Gold chart, earlier in the day right after the new multi-month high, the mentioned news and reports decreased the market risk and Gold safe-haven demand. And then, when we had the second report about the draft of Duma law, increasing the risk of the market, again increased the gold demand and paused the bear's move. Technically also, we can see the market volume is decreasing with lower prices, which is the signal of weakness in the downtrend. $1824 is the main support, and this level can hold the bulls in the short term. In long term, a psychological level of $1,800 will be the main support in the long term.
