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Director of Research and Development at Noor Capital and member of the US Association of Professional Technical Analysts, Mohamed Hashad, was interviewed Monday morning by Dubai Channel to comment on the most outstanding developments in the financial markets during the second week of 2022, as oil continued to reap gains over several sessions in a row, he also commented on the reasons for this uptrend.
Hashad suggested that the reasons that have pushed crude oil prices in this upward trend are several, and he explained that oil actually continued to reap gains and indeed pulled out noticeable gains during last week’s trading, oil even started this week’s trading on highs, so we see crude oil trading around the $84.50 per barrel, and this level was recorded during the morning trading of today’s session.
It is obvious that oil prices ignored the continuation of the outbreak of the Omicron variable, in addition, crude oil prices also ignored the continued withdrawal from the US strategic oil reserves, and thus oil prices received clear support, but this does not negate the existence of market concerns regarding the decline in oil supplies as a direct result of the escalation of political tensions on the Russian-Ukrainian borders.
Oil prices also benefited greatly from the report issued by the International Energy Agency last week, the report indicated a significant decline in US stockpiles, which fell to lowest levels since 2018.
Regarding gold, in light of the continued fear of the markets about the spread of the Omicron variable and the Federal Reserve’s hints of an imminent hike in US interest rates, and in response to a question about the likely direction of gold in light of the latest developments in the markets at the moment, Hashad commented that gold is still within a limited range. The yellow metal seems confused between the continuing fears of the outbreak of the Omicron variant, which increased the number of infected people this week around the world to 25%, but gold is considered a safe haven and a preferred tool for hedge against market volatility, but on the other side; Hashad said he believes that the continued rise in US 10-year Treasury yields is exerting negative pressure on gold prices, especially in the wake of the Federal Reserve’s hints about looming interest rate hike, which increase the cost of holding gold and significantly put pressure on the precious metal prices.
He concluded his speech about gold, saying: “I think gold is still in an uptrend but there is a clear decline in momentum and I believe with the approaching interest rate hikes, as some Federal Reserve officials have indicated 3 hikes this year, this will lead gold prices to the beginning of a new decline.” .
Regarding the Asian stocks that are trading in the green territory, opposite to the trend taken by the US stocks that closed last week’s trading by retreating, Hashad commented that there are reasons for what happened, yes, Asian stocks did not follow the same track as the US shares, but rather the beginning of the new week’s trading with an obvious increase because it benefited greatly from the positive economic data in China, which reflects the growth of the Chinese economy by 8.1%, more than the government estimates of only 6%, in addition to a noticeable surge in the Chinese Gross Domestic Product on a quarterly basis to 1.6%. Hashad believes that investors now prefer European stocks over their US shares with the looming tightening policy by the Federal Reserve.
