Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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Gold closed yesterday’s session comfortably above $4,300 per ounce and bullion prices are now $1,000 higher than they were just two months ago. The macro environment is still good for gold, as trade tensions between the US and China remain high and global uncertainty continues to pervade financial markets. Central banks became net buyers of gold following the financial crash of 2008, but the stockpiling of precious metals really ramped up following the conflict in Ukraine. The past few years have seen record purchases of gold by emerging markets in an attempt to become less dependent on the US dollar. Silver has also had a stellar week so far. Not content to rest on its laurels after breaking its long-standing record last Friday, the white metal has continued to push higher over the past few sessions, closing above $54 per ounce last night.
The flight to safety has not carried over to cryptocurrencies whatsoever. Bitcoin started the month on the front foot, but the cascade of liquidations last Friday has sent prices below $110k per coin. Cryptocurrencies are looking fragile, as are many crypto traders. The recent crash was not a pretty sight and revealed just how vulnerable large swathes of the ecosystem are. By most estimates, $19 billion in leveraged positions were wiped out over the course of the collapse. The initial catalyst, namely the new tariff war with China, explains the initial sell-off, but not the ensuing carnage. The biggest problem was the lack of liquidity on platforms such as Binance and others, combined with traders generally being over-leveraged. The rapid price action weakened many of the financial instruments used by traders and led to synthetic assets de-pegging from their intended value. Technical problems exacerbated matters further, with many traders reporting being unable to open or close problems and UI issues displaying incorrect pricing information. There are rumours of the crash being coordinated to cause as much damage as possible, which certainly seems plausible given the targeted nature of the attack. Binance has since pledged a $400 million bail-out fund to help affected traders and restore confidence in their platform. Adding to the mystery, an unknown whale pocketed a tidy $192 million thanks to a well-timed short placed just before the tariff announcement, prompting speculation about insider trading. So much for “Uptober”.
Risk Warning : Trading derivatives and leveraged products carries a high level of risk.
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