At the end of last week, US President Biden ramped up the fear gauge on markets by claiming that things could get a little “crazy” in Ukraine. The officials from NATO allies and Ukraine suggested that an attack by Russia could be imminent. This drove significant safe-haven asset flows in a flight to safety. In the commodities space, this means that precious metals accelerated higher and oil pulled once more to multi-year highs. However, these moves are beginning to reverse this morning. There are signs of an easing of the geopolitical tensions. If so, we expect the moves higher on commodities to unwind more.

  • Signs that Putin’s Russia could be taking a step back.
  • Gold spiked to an eight-month high but could be set to unwind.
  • Silver has not been as strong as gold but is also reversing hard today.
  • If the war premium unwinds in the oil price, this could mean a drag back below $90 again

Geopolitical tensions show signs of easing

Late last week, it seemed as though tensions that had been bubbling under the surface for weeks were beginning to surface. The US has openly stated that they thought they knew of the date that the Russian invasion would begin (Wednesday 16th February). US citizens in Ukraine and Belarus were being asked to leave. Major financial markets took a flight to safety.

However, from the point of peak tension over the weekend, the picture is beginning to look less parlous. A Russian spokesperson has said that President Putin is willing to negotiate, preferring negotiations and diplomacy. Russian Foreign Minister Sergey Lavrov has said that diplomacy was far from exhausted.

There is also news this morning that Russian troops are beginning to ease back from the border to their bases. According to Interfax (a Russian news agency), the Defence Minister has stated that some units have completed their drills and are returning to their bases. 

So the big question is whether Putin has blinked. It is far too early to tell. Furthermore, Putin is notorious for his supposed subterfuge tactics. So, only a fool would try to pre-empt his next move.

Ultimately though, financial markets are picking up on the change of tone this morning. If this change becomes a trend of improvement, it could have significant implications for commodities.

Precious metals reversing their upside spikes today

Having added over $50 in two sessions, Gold (MT5 code: XAUUSD) continued to spike higher early this morning, hitting a high of $1879. However, since that early move, there has been a significant unwinding. Markets are unwinding their safe haven positioning and given the big gains in gold in the past few days, this leaves it at significant risk of a correction. 

Right now, gold is trading on newsflow. However, there are also some significant technical analysis factors behind recent moves. The rally has failed around the resistance of the old November 2021 high of $1877. This was also a point where the RSI was around 70 (it hit 70 intraday this morning on the daily chart before unwinding). If the price closes around current levels (c. $1854) it would also form a “bearish engulfing” one-day candlestick, which can be a powerful reversal signal.


A significant portion of the price move higher is on “war premia”. If the war threat is reduced then gold will fall back. The initial support band below $1850/$1854 comes in around $1820/$1832. However, if previous unwinding moves are anything to go by in this trading range, then a move back towards $1780/$1800 cannot be ruled out.

Silver (MT5 code: XAGUSD) is also unwinding this morning. Silver has not rallied as strongly as gold has recently, however, there is a sharp retreat underway. A close here would be a decisive “bearish engulfing” and likely set a move back lower at least towards $22.80/$23.00. A decline back towards the key support around $22.00 cannot be ruled out either.


War premia coming out of Oil

There is another unwinding move that is coming through today. The oil price is decisively off its highs of yesterday (when Brent Crude hit $97.15). OPEC+ officials have stated recently that there was a “war premium” to the oil price as a result of the conflict between Russia and Ukraine. So, if the prospect of war reduces sustainably, then this will remove the war premia from the oil price, which should subsequently drop.

This could be what we are beginning to see this morning on Brent Crude Oil (MT5 code: UKOUSD). The move is currently far less pronounced than for gold or silver, but the technicals will be worth watching here.

A small bearish divergence on the daily RSI versus the price (a lower high on the RSI and a higher high on the price) hints at slowing momentum. If the RSI closes in the low 60s it would be a warning sign, below 60 would suggest growing corrective momentum.

We are also watching the eight-week uptrend (at $92.20 today) and the rising 21-day moving average which has often been a strong gauge in recent months. If these are broken then it would suggest mounting corrective potential. The higher reaction low at $90.45 means that this is a key area of support to watch. A close below would open $88.40 and $85.05 as the next key levels.

Brent Crude Oil