Algos Take Historic Liquidity. What to Depressingly Watch For.
There's no other way to say it and no one should deny it- so I'll be the first to announce formally that for the first time since this Gold run began since we broke 1350, I was completely incorrect on what would happen from the 1689 level. All technicals were completely blown off the face of the earth and every asset class plummeted and not just for the US, but for the entire world.
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Unfortunately in this case for the precious metals which have performed quite well in the last 12 months, traders had to meet massive leveraged (50-100:1) margin calls from historically fast accumulating stock losses. As a result, algo bots had to rapidly sell (at historically high volume) assets that performed well (i.e. Gold/Silver - and other things) to meet these demands.
This selling on Gold has nothing to do with safe-haven vs non safe-haven and has nothing to do with technicals, monetary policy, micro- or macro- economics. The reality is when you are deep in the red in 100:1 margin calls, you have to mass and panic sell. There's nothing else to it.
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As a depressing result for many, there is a chance 1689 could have been a temporary top. Although this does not kill the bull run in Gold (or Silver), the near-term fate of Gold will be dependent on if central banks around the world panic and issue interest rate cuts this weekend, or at-least announce them. This has a reasonable chance of happening.
If this is done, the floor will likely be somewhat close to wherever it closes on Friday (perhpas 1550ish at time of writing). If this is not done and no rate cuts are mentioned around the world, the floor likely won't be until the 1450-1520 range before we start running up again at a voracious pace.
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1) If central banks around the world announce rate cuts this weekend, the floor on Gold will be near whatever Friday's close is.
2) If central banks do not 'announce or do' anything, the floor on Gold will be in the 1450-1520 range.
- zSplit
--
Unfortunately in this case for the precious metals which have performed quite well in the last 12 months, traders had to meet massive leveraged (50-100:1) margin calls from historically fast accumulating stock losses. As a result, algo bots had to rapidly sell (at historically high volume) assets that performed well (i.e. Gold/Silver - and other things) to meet these demands.
This selling on Gold has nothing to do with safe-haven vs non safe-haven and has nothing to do with technicals, monetary policy, micro- or macro- economics. The reality is when you are deep in the red in 100:1 margin calls, you have to mass and panic sell. There's nothing else to it.
--
As a depressing result for many, there is a chance 1689 could have been a temporary top. Although this does not kill the bull run in Gold (or Silver), the near-term fate of Gold will be dependent on if central banks around the world panic and issue interest rate cuts this weekend, or at-least announce them. This has a reasonable chance of happening.
If this is done, the floor will likely be somewhat close to wherever it closes on Friday (perhpas 1550ish at time of writing). If this is not done and no rate cuts are mentioned around the world, the floor likely won't be until the 1450-1520 range before we start running up again at a voracious pace.
--
1) If central banks around the world announce rate cuts this weekend, the floor on Gold will be near whatever Friday's close is.
2) If central banks do not 'announce or do' anything, the floor on Gold will be in the 1450-1520 range.
- zSplit
