The prices of gold have dropped in the August 9 early hours in the Asian trading session, compounding the losses that were accumulated in the past week. Gold prices dropped below $1,700 per ounce in what analysts described as stop-loss-driven selling. This is the lowest that the precious metal has dropped since March as a flash crash seemed to rattle the global markets.
Based on data acquired from Tradingview, the price of the precious yellow metal bottomed around $1,690. However, gold has posted a recovery trading above $1,740 at the time of publication.
Today, gold is down by about 4% in the last seven weeks and 8.7% since trading above $1,900 at the end of May. So far this year, the precious metal has lost 8% and is currently 14.6% below its August 2021 all-time high of around $2,040.
How the hell was I asleep for this flash crash in Gold 😳😭😭😭 pic.twitter.com/2Foy7WiOwB
— Chairman Everything-Will-Pump ☝🏾™️ (@chairmanlmao33) August 9, 2021
Peter Brandt, a forex trader, and chart guru said that the latest flash crash might have been caused by wholesale liquidations, stating:
“This has all the fingerprints of a bank/brokerage house conducting forced liquidation upon a huge leverage speculator.”
Brandt said that the leverage ratio on Chicago Mercantile Exchange’s (CME) gold markets is nearly 15 to 1, suggesting that the heavily leveraged traders are dominating the price action for gold.
Analysts working at one London trading firm City Index also blamed the flash crash on “stop-loss related selling in very thin market conditions.” Nonetheless, US unemployment figures have acted as catalysts for a drop in commodity prices in the past week. The unemployment rate also dropped more than it was expected to 5.4% from 5.9%, a new low of the pandemic era, according to one Bureau of Labor Statistics report published on August 6.
With the labor market and economy is the general US economy continuing to heal, City Index concluded:
“The better jobs data sent the US dollar and US bond yields higher, never a good formula for commodities.”
Currently, one bitcoin is worth more than 25 ounces of gold which is 28.5% down from its all-time high against gold. At some point when Bitcoin was heading to its all-time high of about $65,000 in mid-April, one Bitcoin was worth around 35 ounces of gold. Nonetheless, one bitcoin was worth 15.5 ounces of gold at the beginning of this year.
At the time of publication, bitcoin has dropped 1.7% in the last 24 hours to trade around $44,950, according to CoinGecko.