Beijing time Monday in the European session, spot gold and silver suddenly plunged, including spot gold fell as low as $1854.89 / ounce, followed by a short rapid recovery of $18. By 19:48, gold had regained the 1880 mark; spot silver fell below $25 per ounce, retracting all intra-day gains at the end of the day, down more than 2%, once below $25.
COMEX most active gold futures contract at 18:05-18:07 GMT in three minutes volume of 7,943 lots, trading contracts worth a total of nearly $1.5 billion.
The currency market also saw movement. The dollar continued to move higher, and at 18:25 GMT, the U.S. index broke above the 91 mark; the euro fell briefly against the dollar, extending its decline to 1%. The Australian dollar fell 2% against the U.S. dollar.
In the stock market, U.S. stock index futures dived briefly, with Dow futures down 1.6%; S&P 500 futures fell 1.39% and Nasdaq futures fell 0.7%. The Nasdaq exchange is investigating connection failure issues reported by certain users. In addition, European stocks continued to extend their losses, with the German DAX and Spanish IBEX falling more than 4%.
A few words about this sudden wave of declines
Boosted by several positive points, gold and silver moved higher earlier and this sudden wave of decline could be a result of profit taking by certain buyers, according to GL Forex, hedge funds taking profits from gold to cover losses on stocks. When this group of buyers suddenly pulled out, it is not surprising that prices suffered a sharp pullback.
This wave of decline is also believed to be related to pre-holiday position transfers.
With the Christmas holiday this week and only three full trading days, market liquidity tends to diminish and any unusual volatility could be amplified.
Today’s decline and last month’s Thanksgiving period is somewhat similar to the market, when in the Thanksgiving holiday, gold market trading is quite light, in this occasion suddenly appeared huge volume of buying and selling orders, once by 450 million U.S. dollars large single smash.
There are also explanations that the dollar surge may be the main cause of this wave of selling.
Analysis by the financial website DailyFX pointed out that the widespread spread of risk aversion led to a strong dollar index, causing spot gold and spot silver to fall under pressure. Today, the dollar hit new highs against several currency pairs. Meanwhile, the panic index VIX rose more than 12% to 27.23, having reached its highest level since Nov. 5.
Ole Hansen, commodity strategist at Saxo Bank, agreed that the virus mutation has challenged the optimistic impact of the vaccine rollout, prolonging the pain in the market, which is now being tested by a liquidity crunch as well as sharp fluctuations in the dollar.
New Coronavirus 2.0 has killed
The announcement about the emergence of a mutated neo-coronavirus on British soil is really worrying the market. Northern Ireland said four cases of “probable” variant of the new coronavirus have been identified. World health Organization chief scientist Soumya Swaminathan: It is unusual to see such a large number of virus mutations.
The mutated virus may have spread even before the city of London was closed. Christian Drosten, a leading German virologist, said the mutated new coronavirus that appeared in Britain was already present in Germany. The French health minister said it is possible that a new mutant new coronavirus is spreading in France, but the virus has not yet been found in France.
In addition to the spread of the outbreak, there are concerns that vaccines that have been developed may not work in the presence of mutated viruses, and Soumya Swaminathan noted that it may take days to weeks to see the impact of mutations in the new coronavirus on vaccines. However, the Russian Direct Investment Fund clarified that the Russian “Satellite-V” neo-coronavirus vaccine is effective against newly mutated neo-coronaviruses.
Currently, several countries and regions have banned flights from the UK, including France, Germany, Ireland, Canada, Hong Kong, China, and others.
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