What does this sudden dip in gold today mean for the forex market in general?
Will the JPY and USD gain more ground because of this?
There are at least 2 main reasons as to why gold plunges:
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US recovery - There are signs of recovery in the US, which prompted the Fed to reduce its stimulus program. Since USD and gold are known to have an inverse relationship, the US recovery may have contributed to the drop in gold.
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Cyprus gold reserves - Cyprus was set to sell its gold reserves to raise around 400 million euros. This brings up the possibility of other heavily indebted euro zone nations such as Italy and Portugal to follow the same action.
The JPY on the other hand doesn’t really have a correlation with gold and it’s still expected to weaken in a long-term due to BOJ’s aggressive stimulus.
It certainly grabbed my attention! I thought someone had gone to war or something! This is certainly a MASSIVE move.
BBC are talking about China’s growth, fed announcements and cyprus selling it’s reserves. According to a UBS Wealth Management spokesperson there has been a lot of panic selling pressure too.
I tell you what though, I’m quietly laughing at all those cash for gold companies who I would imagine are about to make a loss on what they bought these last few weeks.
Yes for sure, there’s too many of them in my local mall lol
Part of it is that $1500 was a major psychological level and once it dropped below that between stop losses and fear the selling just increased even more.
Copper, Oil, Silver have also dropped quite a bit, as well as the commodity currencies AUD, NZD and CAD.
Could also be because commodity traders are fed up and want more yield for their bucks? Gold was showing only weakness anyways.
China’s lower than expected YoY GDP Growth was definitely a factor. I’m keeping an eye on Chinese Monetary Policy to see how they respond.
Seems like knowing to pull back in time here made all the difference. i am nto sure the analysis here is 100% accurate and would be happy to hear opinions about the fluctuations in gold.
There is nothing wrong with the Gold sell of. Corrections are good and healthy for the market. Gold was already up 12 years in a row, so a correction was due in place. Nothing goes straight up or straight down. That’s just the way markets work.
I am also afraid about the present Gold market declining trends. Is it wise to sell out my little lot? I am confused.
Oh, thanks for the information you provided. It helped to reduce my mental pressure.
Who knows short term, but long term I am still bullish on gold. Although it trades like any other cross, my view is more based on physical demand. Meaning; how low can it go down until actual real gold users start buying massive amounts of the metal? I use these dips as short term trading opportunities, but over a 3 year time horizon I don’t see it staying down, but that’s just my opinion.
And who are the real gold users? As far as I know, gold is almost not used in the industry… But Silver is (50% of production is for industrial use!!!), and it suffered even more losses than gold recently!
At the current moment, I am maintaining a bearish view on Gold as well.