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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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After a Monday morning flash crash in gold and silver what comes next

August 8, 2021 11:31 PM

The unemployment rate dropped more than expected, to 5.4% from 5.9%, indicative of a continuation of growth and a healing labour market, but not at a fast enough pace to stoke fears of a sooner than expected taper.

The better jobs data sent the US dollar and US bond yields higher, never a good formula for commodities. Gold was amongst the worst performers on Friday as it closed over $40 lower at $1762.70 (-2.29%), just above crucial uptrend support coming in $1755/50 area.

After an innocuous first hour of trading for the new week, at 8.50 am Sydney time or 6.50 pm ET, gold slipped through the $1750 support level and within 10 minutes had fallen -$73.00 on the back of what appears to have been stop-loss related selling in very thin market conditions.

“Flash crashes” are not uncommon during the early hours of the Asian time zone. For more information on why a “flash crash” might occur, please refer to an article we wrote on a flash crash in AUDJPY in 2019 that hopefully will provide more insights here.

This morning’s fall in gold triggered a plunge in silver from $24.00 down to a low of $22.10. Offering some encouragement for those quick enough and brave enough to buy the dip in gold, the $1677 low in gold was just ahead of the $1676 double low from March this year.

Gold has since recovered and is trading near $1740, below former support, now resistance at $1750/60. Silver has rebounded and is currently trading at $23.90, just below former support, now resistance at $24.00/20.

Both gold and silver need to reclaim the resistance levels mentioned above on a daily closing basis. Otherwise, the risks are for a retest of this morning’s “flash crash” lows in the coming sessions.

Source Tradingview. The figures stated areas of 9th of August 2021. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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