【Hotspot Tracking】Russia-Ukraine Ceasefire in Sight, Gold Plummets Over 8%

The Russia-Ukraine conflict broke out in February 2022 and has lasted for 3 and a half years so far. Ceasefire negotiations have been mentioned many times before, but no substantial progress has been made. However, in this round of negotiations, Ukrainian President Zelensky rarely expressed his willingness to end the war. The prolonged war may be coming to an end. The easing of risk aversion has led to a sharp short-term drop in gold. Yesterday, the intraday decline of gold exceeded 300 US dollars (over 8%).

Wind Direction Shifts, Jointly Supporting Ceasefire

Previously, Europe had been chanting "support Ukraine to fight to the end", but now it has turned to supporting ceasefire negotiations. Yesterday (21 October), leaders of the European Union, France, Germany, the United Kingdom, Italy and other countries jointly signed a statement, and Ukrainian President Zelensky also agreed to a ceasefire. Compared with before, the biggest change is that the ceasefire negotiations will be launched based on the actual control line, which makes the conclusion of a ceasefire agreement more likely.

Behind the Russia-Ukraine ceasefire is the continuous increase in economic pressure. In the past 3 and a half years, the European Union has provided more than 100 billion euros in aid to Ukraine. Germany, the locomotive of the European economy, has experienced an economic stall, France is struggling financially and its sovereign credit rating has been downgraded. In particular, the rapid resignation of the French Prime Minister has shown the world the irreconcilable contradictions between France's high taxation, high debt and high welfare, and there is no way to deal with the continuous rise in the fiscal deficit. Looking at Europe as a whole, energy prices have soared, a large number of enterprises have relocated overseas, competitiveness has declined, and public approval ratings have hit new lows. Under the continuous pressure from Trump, Europe's promotion of the Russia-Ukraine ceasefire is more like a proactive choice for Europe to stop losses. From another perspective, it is not bearish for gold. As the credit crisis of various countries worsens, increasing gold reserves by major central banks remains one of the few important ways.

Core Bullish Factors Remain, Gold Faces Short-Term Resistance

Although the easing of risk aversion has led to a sharp short-term drop in gold, judging from the core factors driving the current round of gold's rise, this trend is intensifying. Japan's upcoming "Economics of Sanae Takaichi (expanded money printing)" and the bottomless debt black hole in the United States will inevitably move towards fiscal deficit monetization in the future. In an era of shaky global credit currencies, gold, as an asset independent of sovereign credit and cannot be infinitely printed by central banks, has become the ultimate and most reliable value anchor.

Owen, a senior gold analyst at Zhisheng Research (exclusively invited by Plotio) , believes that gold has risen by more than 1,000 US dollars since the end of August. The progress in the Russia-Ukraine ceasefire negotiations, combined with profit-taking by long positions, has led to a rapid short-term drop in gold, which is difficult to directly change the bullish trend of gold. It is very likely that gold will resume its upward trend after adjustment. This week, focus on the support level of 4,000 US dollars below, and the upper side can first look at the 4,300 US dollars level. If the decline is recovered within the week, it is not ruled out that it will break through 4,400 US dollars next week.

[Important Disclaimer:The above content and views are provided by Zhisheng, a third-party cooperative platform, for reference only and do not constitute any investment advice. Investors who trade based on this information shall bear their own risks.]
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