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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After hitting record intra-day highs on Tuesday, US indices were quickly brought back down to reality after Chairman Powell suggested that by many measures, equity prices were “fairly highly valued”. Not the harshest of judgements by any means, but stocks had been looking for an excuse to come down from recent highs and Powell’s speech seemed to fit the bill. The Fed Chairman hastened to add that this is "not a time of elevated financial stability risks". Futures contracts are marginally in the black going into today’s session.
Powell’s words also reached the ears of precious metals traders, cutting short yesterday’s rallies in gold and silver. Gold came within $10 of $3,800 before giving up some of its gains, while silver closed the day almost flat, although crucially remained above $44 per ounce. With nowhere else to go, the recent gains in gold and silver are currently spilling over into other metals, namely platinum and palladium. Platinum rose over 4% yesterday to breach $1,500 for the first time since 2014 and both metals continued to surge in early morning trading in Asia. The current climate heavily favours precious metals as central banks around the world continue to move away from US treasuries. Given the lower rates on the USD, and the prospect of even lower rates in the near future, hoarding dollars now makes less sense than at previous times. With stock markets at record highs, precious metals are seen as the obvious play by many investors.
Cryptocurrencies on the other hand are facing a bit of a conundrum. The massive liquidation event on Monday culminated in over $1.5 billion in bullish positions being wiped out, but despite the selloff, prices have shown surprising resilience. The larger caps have incurred only modest losses so far but the overall direction of travel remains unclear. The rise in prices seen across cryptocurrencies over the summer was fuelled in large part by firms publicly launching digital-asset treasuries.
Michael Saylor’s Strategy acquired another 850 BTC on Monday, bumping the company’s holdings up to a colossal 640,000 BTC. Japan’s Metaplanet meanwhile purchased 5,419 BTC at the start of the week, making the company the fifth largest corporate Bitcoin holder with 25,555 BTC in its war chest. Funds far and wide continue to top up their stacks with various digital assets, the obvious question being how the sustained buying pressure will translate into price action.
Risk Warning : Trading derivatives and leveraged products carries a high level of risk.
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