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Geopolitical risks in Middle East ... the engine of global markets at the beginning of 2020

6 Jan 2020 11:57 AM

The Middle East led the global markets at the beginning of 2020 after the developments witnessed last Friday, the most prominent of which was the killing of Qassem Soleimani through an American strike in Baghdad. Instead of anticipating markets during the year 2020, a documented agreement between the United States of America and China, and the official exit of Britain from the European Union, the geopolitical risks in the Middle East were the main drivers of the global markets, which caused the high risk aversion and changing the course of the global economy throughout the year.

Gold fell on the throne of most commodities that investors resorted to, with the escalation of geopolitical tensions, to reach at the beginning of weekly trading to levels of $ 1588 an ounce, which he had not reached since April 2013, tracking gains in the first two days of this year last week by 2.5%, which is the best pace of gains since August the past.

Although gold has abandoned some of its recent gains, our buying expectations remain valid over the medium term as the positive momentum on the MACD indicator continues. However, gold may retreat a little in the near term with the stochastic approaching the overbought zone on the stochastic towards the $ 1555 level before reaching 1490 levels.

On the other hand, most bond yields fell globally with turmoil in the global situation, where the ten-year German government bond yields fell to their lowest in two weeks, Spanish bond yields to their lowest in two months, and the US to the lowest in three weeks.

The American economy may not be spared from these turmoil, especially with the indication of the American Federalist that the escalating of the American tensions with Iran would affect the pace of the American economic expansion in 2020, and therefore the green currency may be affected to keep the negative expectations in the medium term and the dollar index may return to 96.00 levels Which will support the rise of other major currencies against the dollar.

Of course, the main stock indices were affected by investor fears, and the Dow Jones fell from its highest level to 28380, but the continuation of the bearish scenario requires closing the price below those levels to reach 28000, where the price is currently testing the moving average 100 over the four hour time frame, and in the case of Its bounce from those levels may revert back to 28580.

As for the German DAX index, it clearly reflected the deterioration of the German economy, and that it may be the most deteriorating economy in 2020 if these conditions persist, which the German Finance Minister emphasized that the conflict in the Middle East is the last thing the German economy can bear, as the index has fallen towards Now to 12800.

Oil prices rose strongly to reach their highest levels in more than three months, and despite the slight declines recorded by black gold in the beginning of the weekly trading, our positive expectations remain in the coming period with the prospects of declining supplies in the Middle East against the background of those tensions, especially in Iraq It may reach levels of $ 66 a barrel.