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Gold & Silver Meltdown!!

Gold – Daily Candlesticks
Source: GKFX / MT4 (August 12, 2020)

Gold just has a one-day price drop of over $125, taking it through 2000 and down to 1900 again, which corresponds to the 61.8% Fibonacci retracement of the recent sharp up-move. Further support comes in below from the rising trendline, 20 DMA and full retracement near 1800.
 

TAKEAWAYS


•    Gold and silver prices crash
•    Russia approves first coronavirus vaccine
•    S&P 500 caps 8-day win streak
•    DAY AHEAD: Tencent, Lyft Earnings, RBNZ, UK GDP, US CPI
 

MARKETS


The bigger movers were the precious metals, where gold dropped 5.2% and silver slumped 13.8% to just hold onto the $25 handle, while platinum and palladium also saw large declines. Bitcoin the so-called ‘digital gold’ also saw a big slide on the day dropping to just above $11,000, having touched $12,000 a day earlier.

It was a bumper day for European equities following strong German investor confidence data and news of the approved coronavirus vaccine from Russia. Wall Street gave up early gains to turn lower led by tech shares as the S&P saw its first daily decline in 8 days after coming short of a record high. 

The US dollar started soft but ended up closing at highs of the day versus most major currencies pairs in a sign its recent showing of strength might not be finished. EUR/USD hit 1.18 after the ZEW data but rolled over from there back towards 1.17.
 

GURU WISDOM


“Nothing is impossible. The world itself says I’m possible” - Audrey Hepburn
 

Russia Vaccine


The announcement from Russian President Vladimir Putin that his country is the first to approve a coronavirus vaccine was met with optimism by investors, as well as scepticism from scientists in other countries. 

Putin said: “This morning, for the first time in the world, a vaccine against the new coronavirus was registered.”

The point is not necessarily that Russia’s vaccine is the silver bullet, but especially combined with the news the US has reached a deal with Moderna to buy 100 million doses of its vaccine - it’s all baby steps towards putting the health crisis behind us. If the health crisis is behind us, then extreme levels of government borrowing and central bank money printing can end too- explaining some of the drop in gold today.
 

Coming Up…


Chinese technology, computer games and social media giant Tencent reports what are expected to be impressive Q2 earnings. The main data points for today will be UK Q2 GDP where a stunning 20% quarter-over-quarter decline is expected as well as US CPI inflation. Before that New Zealand is expected to hold rates steady. The decision comes a day after New Zealand reported its first local COVID-19 case in over 100 days.
 

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