In the early hours of the Asian session today, Gold, nicknamed the “Yellow metal,” flash crashed below the $1,700 trading range but has now recovered to trade above the $1,750 range at the start of the Asian session.
The price of Gold crashed during the Asian trading session today, compounding losses accumulated over the past week. The yellow metal ended last week bearish by 2.73% after trading at a high of $1,835.90 in an attempt to break through a major resistance at the $1,850 trading zone, to end the week trading below the $1,800 support zone and close at $1,763.10. This came on the back of the Non-Farm Payroll (NFP) news that revealed a very bullish U.S Job report which gave strength to the U.S dollar index, thereby causing major declines not just in Gold but other commodities.
The yellow metal declined by as much as 4.87% in the Asian session to trade at a 4-month low. It started the week opening at $1,763.80 and traded as low as $1,677.90 in the Asian session, a price point that has not been seen since March but has recovered by 4.32% at the start of the London session to stand at $1,750.35 as of the time of writing this report. For the day, the yellow metal is still down 0.74%.
A major reason for the decline in Gold is the latest U.S. jobs report released on Friday which revealed that non-farm payrolls rose by 943,000, while the unemployment rate fell to 5.4%, in July. This gave strength to the dollar index thereby causing a decline in the price of Gold.
In Asia, China also released data earlier in the day. The country’s CPI rose 1% year-on-year and 0.3% month-on-month, while the producer price index (PPI) rose 9% year-on-year, in July. Meanwhile, prices eased in India, where the physical gold market flipped into a small premium during the previous week for the first time in a month. However, activity remained subdued in one of gold’s biggest hubs.
What they are saying
TD Securities analysts said in a note that “Gold broke below its bull-market defining trendline for the first time since 2019, fueling significant stop-outs and melting the yellow metal’s prices.”
According to Senior Market Analyst, Jeffrey Halley at Marketpulse, “This morning, a liquidity black hole, exacerbated by a Japan and Singapore holiday, saw gold plummet $87.00 to around $1680.00 an ounce in a stop-loss and algorithmic selling negative feedback loop. The trigger appears to be a fall through critical support at $1750.00 an ounce after US futures margin servers were turned on at 7 am Tokyo time.”
Although the Gold market seems to have recovered, investors appear to be taking a back seat to see how things play out. Now, they look towards further data, which includes the U.S core consumer price index (CPI) scheduled to be released on Wednesday.
In other precious metals, silver is currently down 1.70% to currently trade at $23.90 but in the Asian session, the metal declined as much as 7.5% to a more than eight-month low of $22.30 per ounce. Platinum is currently down 0.86% to stand at $963.50 but traded a low of $954, a 2.07% decline; and palladium is currently down 0.34%, trading at $2,621.25, as of the time of writing this report.