Is Gold and Silver no more safe heaven?

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According to media reports on August 8, the gold market suffered a crazy sell-off after the non-agricultural report was released on August 7th, spot gold fluctuated violently, and then encountered a crazy sell-off. At around 1 am on Saturday, the selling momentum reached its peak, with the lowest falling to 2015.18 US dollars per ounce. The lowest level of gold prices on Friday, the highest drop within the day was as high as 60 US dollars, after non-agricultural, the biggest drop was also close to 50 US dollars. Similar to gold, there is silver, which is now quoted at US$28.02 per ounce that night, a drop of nearly 3%.

Why did the crazy hot gold market suddenly “turn off” overnight? The analysis believes that the direct factor for the sudden sell-off of gold prices on Friday is the US dollar after the non-agricultural report was released, the US dollar rebounded sharply, reaching a maximum of 93.63 and a maximum increase of nearly 100 points in the day. In this regard, analysts said that because the U.S. non-agricultural employment report in July was better than market expectations and confirmed the “big number” Trump said, the U.S. dollar rebounded strongly! David Meger, director of the metal trading department of High Ridge Futures, said that after the announcement of the employment report, the dollar rebounded quite strongly this apparently caused the metal to be sold off across the board. Kitco analyst Jim Wyckoff said that the U.S. dollar index rebounded strongly from the two-year low touched on Thursday, while spot gold fell sharply, but remember that a rapid and substantial climb in the market often leads to a larger downward correction. .

To tell the truth, such a large-scale plunge in the price of gold and silver is completely unexpected. Why do you say that? We have to divide it into several directions for a comprehensive analysis.

First of all, we must understand that the price of gold and silver has experienced large-scale rises in turn in the recent period. We have done many rounds of analysis before this kind of increase. In fact, the core reason is that when the world is facing greater economic uncertainty, the price of gold and silver priced in US dollars is both in the US dollar market and the US economy. When uncertain, it becomes an important safe-haven asset. For people all over the world, choosing gold and silver to avoid risks at this time is undoubtedly the best choice. Therefore, huge economic uncertainty, coupled with the common need for everyone to avoid risks, has spawned a massive rise in the price of gold and silver.

Secondly, why does gold and silver have such crazy diving? In fact, for the same reason, just like our previous analysis, because the U.S. non-agricultural employment data report is better than the expectation of the entire market, under such circumstances, many people are speculating whether the U.S. economy has begun to recover. It is possible that the recovery has been achieved, so there is no need to use gold and silver as safe-haven assets. This is an important reason why the price of gold and silver has plunged again. In fact, we can see the fundamental logic from this, which is that the overall price of gold and silver actually has the future stability of the US dollar. As a seesaw, if the US economy improves and the future stability of the US dollar increases, there will be no large-scale release of water. Phenomenon, then the price of gold and silver will be in the downward range. If the future US economic uncertainty increases, gold and silver may enter the upward range, so this is the overall core logic.

Third, how should we view the future of gold and silver? We have already talked about this issue before. Very special precious metals like gold and silver are actually the main channel of safe-haven funds. From the current point of view, the world is still in a crisis of economic uncertainty. Among them, in this crisis, the prices of gold and silver still have a relatively large upside space, but this is only a room. As for whether it will go up specifically, there is actually considerable uncertainty, and we have repeatedly emphasized After the current high price range for gold and silver, this means that there is a considerable risk. If this risk is not carefully considered, it is likely to face a relatively large crisis.

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Digital Nomad

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