As the potential for a trade war between the world’s two largest economies – China and the U.S. – have started to abate, a new conflict has started worrying markets. The West has been considering the potential of sanctioning Russian owned companies and assets as a reaction to both the Skripal poisoning and escalating tensions in Syria. The second event was kicked off by the alleged use of chemical weapons against civilians in Douma – one of the last rebel held territories closest to Syria’s capital of Damascus. The chemical attack was reported to be enacted by the Russian-backed Assad forces.
This caused a spike in the prices of both Oil and certain industrial Metals – as rumors circulate about sanctions being taken against UC Rusal – a Russian owned company with operations in the U.S.
The rally seemed to effect other metals with industrial applications also – including Palladium which after a relatively flat few days seems posed for a break-out.
Oil’s rally was likely fueled (I apologize for the unavoidable pun) ) due to production cuts by OPEC and Russia over the past 16 months, the rising geopolitical risks such as conflicts in Middle East and the risk of the U.S reenacting sanctions to Iran. Oil’s price hit its highest level since 2014. WTI was at $69.09 and Brent at $74.33 at the time of writing this article.
The volatility index (VIX) is showing a downwards trend, and the drop in a price of gold and silver seems to reflect this; gold was banded between 1350.68 and 1344.88 and silver between 17.2051 and 17.1318 (at the time of writing).
These conditions are the bread and butter of trend traders, as both new highs and lows are forming Hence, resistance and support levels break and new levels are ready to be tested!
The post Market Update appeared first on Forex.Info.