Noor Capital | Dubai TV Interview, 24 January 2022

Dubai TV interviewed Mohamed Hashad, the Director of Research and Development at Noor Capital and member of the American Association of Technical Analysts, to comment on a number of the latest developments that financial markets are witnessing this week, most notably:

First: Crude Oil

In light of the continuing geopolitical tensions, what are the expected levels of oil in the upcoming period?

Hashad indicated that crude oil started the current week with gains, as it recorded gains during the morning session on Monday, its highest level around $85.90 per barrel.

There are several factors that pushed oil prices to rise, foremost among them the continuation of tensions in Eastern Europe between Ukraine and Russia, in addition to the current tensions in the Middle East, all of which have pushed oil prices to surge.

Fears also increased within the markets about the potential disruption of oil supplies due to such political tensions, which in the past weeks also led to a sharp drop in inventories to their lowest levels since 2008.

Accordingly, Hashad believes that oil has established a good support closer to the $84.70 level, and markets could witness more rises towards $87 and even $88, if it maintains trading above the level of $84, but if it breaks this level and closes today’s session below the 84.70 level, then, Hashad suggests that there will be some bearish corrective bias towards levels of $81.80.

Second: Gold

Amid expectations of raising interest rates and inflation levels, gold is seen in confusion. Will investors rush to gold in the coming period? What is the expected price range for gold?

Gold is trading sideways between the levels of 1825 and 1840 dollars per troy ounce. There are several mixed factors affecting gold prices during the current period. Gold is seen confused between the possibility of raising interest rates during 2022 from three to four times, which in turn constitutes negative pressure on gold prices, because raising interest rates leads to an increase in the opportunity cost of holding gold that does not yield returns, and between the increase in inflationary pressures and political tensions.

Gold is currently a favoured inflation safe haven to hedge against inflation and a safe haven against market volatility.

Therefore, Hashad believes that markets will witness more sideways trading in gold during today’s session and tomorrow’s session until the Fed shows its decision on interest rates, but on the technical side, if gold breaches the 1845 level, the precious metal may extend its gains to the 1860 dollars per ounce level, but if the support level of 1825 is overcome, we may see a further decline to the 1800 level.

Third: European Stocks

Today, European stocks fell despite positive preliminary data on the rise in manufacturing and industrial activity in Europe, so what is the explanation for this trend?

Hashad explained that industrial activity in Europe today recorded its highest level in five months, but it is considered so far, despite the decline in European stocks, that it is a better performer than the American counterpart. As the persistence of existing pressures from the Omicron outbreaks is significantly putting pressure on the stock markets. Also, the main factor trying to support European stocks is the recent statement by the ECB’s Christine Lagarde, in which she said that she rules out raising the interest rate decision during 2022.

Thus, Hashad believes during the upcoming period, investors may prefer European stocks over American stocks, given what the markets expect from the Fed’s tighter monetary policy.