Gold prices have dropped below $1,700 per ounce this morning in what analysts described as stop-loss-driven selling.
Gold prices have tanked during the Monday morning Asian trading session, compounding losses accumulated over the past week.
On August 9, the price of gold rapidly fell to its lowest level since March as a flash crash drove prices below $1,700/oz.
According to Tradingview, the price of the precious yellow metal plunged to $1,690/oz. during Asian trading hours on Monday. The price of gold has since posted a minor recovery, last changing hands for $1,742/oz. on the time of writing.
Gold is at the moment down by 4% over the previous 7 weeks and 8.7% since trading above $1,900/oz. at the end of May. The precious metal has retreated 8% for 2021 up to now, and it’s at the moment down 14.6% from its August 2020 all-time high of just below $2,040.
Foreign exchange trader and chart guru, Peter Brandt, attributed the crash to wholesale liquidations, stating: “This has all the fingerprints of a bank/brokerage house conducting forced liquidation upon a huge leverage speculator.”
He noted that the leverage ratio on Chicago Mercantile Exchange’s gold markets is roughly 15 to 1, suggesting heavily leveraged traders are driving price action for gold.
Analysts at London trading agency City Index equally blamed this morning’s crash on “stop-loss related selling in very thin market conditions.”
However, U.S. unemployment figures have also been the catalyst for a decline in commodity prices last week. The unemployment rate dropped more than expected to 5.4% from 5.9%, a new low of the pandemic period according to a Bureau of Labor Statistics report published Friday. With the labor market and economy is broader U.S. 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.”
With one BTC at the moment worth 25 ounces of gold, Bitcoin is down 28.5% from its all-time high against gold — with a single BTC having been worth 35 ounces of gold during Bitcoin’s all-time price high of nearly $65,000 in mid-April. However, one Bitcoin was worth 15.5 ounces of gold at the start of 2021.
At the time of writing, BTC had slumped 2% over the past 24 hours to trade for $43,667.