NAGA: Why did the Gold and Silver Flash crash this morning?

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It’s all over the news – Gold XAU / USD and Silver XAG / USD recently experienced a sharp drop known as a flash crash.

Let’s look at what happened and why.

What happened?

At one point Gold XAU / USD lost ground, falling about $ 100 (-5%).

While cryptocurrency traders are used to such fluctuations, it is not so common in the cash commodities market and there must be some reasons for the event.

Why is that happend?

First, last Friday the US reported better-than-expected employment numbers that are good for the US dollar. In such cases, gold usually tends to decline as gold trades inversely with the performance of the US dollar. However, this was not the first time that employment numbers exceeded market analysts’ forecasts.

Another factor that comes into play is the wager by institutional investors that the Federal Reserve could soon begin scaling back its massive monetary stimulus.

Finally, there is a theory from a famous forex trader, Peter Brandt, that the crash was due to the liquidation of a huge leverage speculator that resulted from an early morning stop loss.

While it is not 100% clear what exactly caused the crash, the aforementioned 15: 1 leverage and the potential liquidation of a huge position seem like the best catalyst for such a sudden decline.

Currently both Gold XAU / USD and Silver XAG / USD have rebounded slightly and everyone is waiting to see how and if this will affect US stock markets when they open later today.

Disclaimer of liability

NAGA Group AG published this content on September 07, 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unchanged, on September 07, 2021 14:41:06 UTC.

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