Let's take a look at what happened and why. 🔎
At one point, Gold XAU/USD lost its ground and fell by roughly $100 (-5%).
While cryptocurrency traders are used to swings like these, it's not so common in the cash commodities' market, and there must be some reasoning behind the event.
Why did it happen?
👉 First of all, last Friday, the US reported better than expected employment figures that are good for the US dollar. In such cases, usually Gold tends to decline because Gold trades inverse to the performance of the US Dollar. However, this wasn't the first time the employment figures outperformed market analysts' predictions.
👉 Another factor that comes into play is the institutional investors' bet that the Federal Reserve may soon start paring back its massive monetary stimulus.
👉 Finally, there's a theory by a famous Forex trader, Peter Brandt, that the crash is due to liquidations of a huge leverage speculator, resulted from a stop-loss early this morning.
Although it's not 100% clear what exactly triggered the crash, the mentioned 15:1 leverage and the potential liquidation of a huge position seems to be the most possible catalyst for such a sudden decline.
Copyright © 2022 – All rights reserved.
NAGA is a trademark of The NAGA Group AG, a German based FinTech company publicly listed on the Frankfurt Stock Exchange | WKN: A161NR | ISIN: DE000A161NR7.
The website is owned by The NAGA Group AG and operated by NAGA Global LLC which is incorporated under the laws of St. Vincent and the Grenadines as an Limited Liability Company (1189 LLC 2021) and is an operating subsidiary within The NAGA Group.
NAGA trademark is operated by NAGA Group subsidiaries, including:
Trade Responsibly: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing you money. Past performance of a NAGA community member is not a reliable indicator of his future performance. Content on NAGA's social trading platform is generated by the members of its community and does not contain advice or recommendations by or on behalf of NAGA.
Trading with NAGA Trader by following and/or copying or replicating the trades of other traders involves high levels of risks, even when following and/or copying or replicating the top-performing traders. Such risks include the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Before making an investment decision, you should rely on your own assessment of the person making the trading decisions and the terms of all the legal documentation.
Restricted regions: NAGA Global Limited does not provide services for the residents of certain countries, such as the United States of America, Canada, the United Kingdom, Israel and the Islamic Republic of Iran.