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The gold price fell more than 4% at the opening of trading in Asia on Monday, after the price had also fallen more than 2% on Friday. The gold price bottomed out at around €46,300 per kilo, while the Silver price to €624 per kilo. However, the price drop was short-lived, as in the course of the morning, the prices of both precious metals recovered almost to the level before the flash crash.
Last Friday, the prices of precious metals already fell somewhat after the publication of better-than-expected jobs data in the United States. According to official statistics, 943,000 new jobs were created. The jobs figures for the past two months were also revised upwards, bringing the official unemployment rate down to 5.4%. This means that unemployment in the US is back to the level it was before the corona crisis.
Monday morning's price drop was striking, as it took place in a very calm market. Due to a public holiday, the fairs in Japan and Singapore closed, which meant that there was little liquidity in the market in the early morning. Because there were few active buyers at that time, several Stop Loss levels. This exacerbated the price decline, causing the Gold price fell more than 4% in a short period of time. The price fell to its lowest level since mid-April.
As other markets in Asia opened up and more traders became active, the prices of the precious metals recovered again. Bargain hunters in other Asian markets took advantage of the price drop and got into the market. When the gold market opened in London on Monday morning, prices had already largely recovered from the decline. The question, then, is which trader will come up with the idea of selling so much precious metal – about 24,000 futures contracts with a total value of $4 billion – at a time when there is hardly any trading in the market.
Gold price rebounds after sudden flash crash on Monday morning (Source: Goldprice)
This contribution comes from Geotrendlines
