Gold sags after flash crash, stocks bulls take a breather
Gold and silver prices remained jittery on Wednesday after the sharpest pullback in over five years, while global equity and bond markets were taking a breather from recent rallies.
Gold, which remains on course for its strongest year since the 1979 oil crisis, dipped below $4,100 an ounce in London trading, continuing the bout of profit taking that sunk it more than 5% on Tuesday.
There has been no obvious catalyst for the plunge other than general altitude sickness after a blockbuster run amid uncertainty about a reshaping of the world order.
EUROPEAN STOCKS DRIFT LOWER, BONDS STEADY
"Gold was massively stretched, massively overbought. There's been a lot of FOMO (fear of missing out) going into that market," said Tony Sycamore, a market analyst at IG, adding that tech stocks and some other markets were in a similar position.
"For some of these other frothy markets, we're seeing little flash crashes now ... We're just seeing little tremors in markets, and potentially there's something more significant to come."
Geopolitics remained front and centre with a planned summit between U.S. President Donald Trump and Russian President Vladimir Putin now in doubt and ambiguity too over a potential meeting between Trump and China's President Xi Jinping.
WAITING ON CENTRAL BANK CUES
The U.S. Federal Reserve also announces its rate decision next week, and investors have almost fully priced in a 25-basis-point rate cut.
The dearth of U.S. economic data due to the ongoing government shutdown means that policymakers could be left flying blind at the meeting, a less-than-ideal situation as they remain divided over which risks deserve the most attention.
Trump on Tuesday rebuffed a request by top Democratic lawmakers to meet until the three-week-old U.S. government shutdown ends.
The shutdown has in turn left currencies largely rangebound over the past few sessions due to the lack of fresh catalysts from data releases, though the dollar edged up slightly on Wednesday.
Source: Reuters.com
