Emas Semerta / Dolar A.S.Singkat
0813 GOLD hit the highest position 3rd times and is correcting
Hello traders,
★ Evaluation of liquidity and market dynamics
Today's financial markets are heavily influenced by liquidity, which plays a pivotal role in determining the price and trading patterns of different types of assets. Recent market data reveals that the price of gold has experienced significant fluctuations and is currently under tight suppression, owing to various intricate factors.
1. Bank holdings
The most recent COMEX Positions Report disclosed that 28 banks (including both U.S. and foreign banks) collectively held 36.6% of the total open interest in the COMEX gold futures market as of August. This data indicates a prevailing bearish sentiment towards gold, reflecting the cautious approach of investors in anticipation of future price movements.
2. Impact of the oil market
Simultaneously, the volatility in the oil market cannot be overlooked. U.S. oil witnessed a 3.67% rise, while cloth oil surged by 2%. Many analysts attribute this phenomenon to the heightened geopolitical conflicts in the Middle East. However, the underlying issue lies in the rapid decline in market liquidity, which could have a ripple effect on other asset classes.
3. Diminishing market liquidity
There has been a noticeable reduction in market liquidity across various major financial markets globally, as evidenced by the following cases.
★ China A-share market
The trading volume in the significant A-share market has declined to around 500 billion yuan, notably lower than the average levels in recent years. This drop in trading volume reflects a lack of investor confidence, possibly stemming from factors such as decelerating economic growth, challenges in the housing market, and geopolitical tensions.
★ U.S. stock market
Liquidity in the U.S. stock market is also dwindling rapidly. Particularly noteworthy is the contraction of liquidity in the derivatives market, which holds substantial influence in the U.S. equity market. The trading volume in the derivatives market usually surpasses that of the stock market due to offering higher leverage and more speculative opportunities.
Since the start of August, the derivatives market has shown a deterioration in two key indicators:
1. Widening of the spread: Reflecting increased market uncertainty by indicating a larger gap between the bid and ask prices.
2. Decline in order volume: Signifying decreased market participant activity, likely due to heightened risk aversion.
The changes in these indicators clearly suggest that market participants are adopting a more cautious approach and reducing their involvement in the derivatives market.
★ Locus of liquidity: The U.S. Treasury Market
As liquidity shrinks in the equity and derivatives markets, the question arises – where does the capital flow? Much of the answer points towards the United States bond market.
1. Rise in safe-haven demand: In times of heightened economic uncertainty, investors tend to redirect capital to safer asset classes, such as United States Treasuries.
2. Decline in Treasury yields: As there is an increased investor demand for Treasuries, the price of Treasury bonds rises, consequently leading to a decline in yields. This trend confirms a massive influx of capital into the U.S. bond market.
3. Preference for liquidity: The United States Treasury market stands as one of the largest and most liquid fixed income markets globally, particularly during periods of uncertainty.
4. Concerns about the economic outlook: The decrease in Treasury yields may reflect investor apprehensions about diminishing economic growth and expectations of future interest rate cuts.
★ ★ ★ Consequence of fundamental factors on gold
The reduction in market liquidity, transformations in the U.S. Treasury market, and economic ambivalence have notably impacted commodities, especially gold:
1. **Demand for hedging and price support**:
Amid elevated economic uncertainty, gold is often favored as a safe-haven asset. As investors pull back from the equity and derivatives markets, some capital is likely to flow into the gold market, bolstering gold prices. However, this effect may be countered by a stronger dollar and fluctuations in Treasury yields.
2. Adverse effects of a robust US dollar:
A resilient U.S. Treasury market typically accompanies a stronger dollar. Given that gold is primarily priced in U.S. dollars, a fortified dollar often exerts pressure on gold prices. This aspect may elucidate the muted performance of gold despite safe-haven demand.
3. Considerations of opportunity cost:
Alterations in Treasury yields also affect the opportunity cost of holding gold. If Treasury yields rise, it may reduce the attractiveness of gold for investors, as gold does not provide cyclical returns.
4. **Systemic pressures on liquidity**:
Overall market liquidity dwindling may further compel certain investors to downsize their gold positions in order to comply with margin requirements or satisfy liquidity obligations in other markets, potentially creating downward pressure on gold prices in the short run.
Overall, the impact of the prevailing market environment on gold prices is intricate and multi-faceted. While safe-haven demand could bolster gold prices, the influence of a stronger dollar
The primary objective in Monday's FIBO EXT 2.0 circle has been achieved, and the ascent and purchase operation have been successful. During the Asian trading period on Tuesday, gold experienced an initial surge followed by a market correction, and it is anticipated that in the subsequent European and American trading sessions, a short position should be adopted instead of pursuing long positions.
Figure 1 illustrates the potential scenarios for gold in the upcoming London and U.S. trading sessions based on the 4-hour chart. The corrective targets are detailed in the chart accordingly. It is advised to await a new short entry signal on the 1-hour chart as part of the Tuesday plan.
★ Evaluation of liquidity and market dynamics
Today's financial markets are heavily influenced by liquidity, which plays a pivotal role in determining the price and trading patterns of different types of assets. Recent market data reveals that the price of gold has experienced significant fluctuations and is currently under tight suppression, owing to various intricate factors.
1. Bank holdings
The most recent COMEX Positions Report disclosed that 28 banks (including both U.S. and foreign banks) collectively held 36.6% of the total open interest in the COMEX gold futures market as of August. This data indicates a prevailing bearish sentiment towards gold, reflecting the cautious approach of investors in anticipation of future price movements.
2. Impact of the oil market
Simultaneously, the volatility in the oil market cannot be overlooked. U.S. oil witnessed a 3.67% rise, while cloth oil surged by 2%. Many analysts attribute this phenomenon to the heightened geopolitical conflicts in the Middle East. However, the underlying issue lies in the rapid decline in market liquidity, which could have a ripple effect on other asset classes.
3. Diminishing market liquidity
There has been a noticeable reduction in market liquidity across various major financial markets globally, as evidenced by the following cases.
★ China A-share market
The trading volume in the significant A-share market has declined to around 500 billion yuan, notably lower than the average levels in recent years. This drop in trading volume reflects a lack of investor confidence, possibly stemming from factors such as decelerating economic growth, challenges in the housing market, and geopolitical tensions.
★ U.S. stock market
Liquidity in the U.S. stock market is also dwindling rapidly. Particularly noteworthy is the contraction of liquidity in the derivatives market, which holds substantial influence in the U.S. equity market. The trading volume in the derivatives market usually surpasses that of the stock market due to offering higher leverage and more speculative opportunities.
Since the start of August, the derivatives market has shown a deterioration in two key indicators:
1. Widening of the spread: Reflecting increased market uncertainty by indicating a larger gap between the bid and ask prices.
2. Decline in order volume: Signifying decreased market participant activity, likely due to heightened risk aversion.
The changes in these indicators clearly suggest that market participants are adopting a more cautious approach and reducing their involvement in the derivatives market.
★ Locus of liquidity: The U.S. Treasury Market
As liquidity shrinks in the equity and derivatives markets, the question arises – where does the capital flow? Much of the answer points towards the United States bond market.
1. Rise in safe-haven demand: In times of heightened economic uncertainty, investors tend to redirect capital to safer asset classes, such as United States Treasuries.
2. Decline in Treasury yields: As there is an increased investor demand for Treasuries, the price of Treasury bonds rises, consequently leading to a decline in yields. This trend confirms a massive influx of capital into the U.S. bond market.
3. Preference for liquidity: The United States Treasury market stands as one of the largest and most liquid fixed income markets globally, particularly during periods of uncertainty.
4. Concerns about the economic outlook: The decrease in Treasury yields may reflect investor apprehensions about diminishing economic growth and expectations of future interest rate cuts.
★ ★ ★ Consequence of fundamental factors on gold
The reduction in market liquidity, transformations in the U.S. Treasury market, and economic ambivalence have notably impacted commodities, especially gold:
1. **Demand for hedging and price support**:
Amid elevated economic uncertainty, gold is often favored as a safe-haven asset. As investors pull back from the equity and derivatives markets, some capital is likely to flow into the gold market, bolstering gold prices. However, this effect may be countered by a stronger dollar and fluctuations in Treasury yields.
2. Adverse effects of a robust US dollar:
A resilient U.S. Treasury market typically accompanies a stronger dollar. Given that gold is primarily priced in U.S. dollars, a fortified dollar often exerts pressure on gold prices. This aspect may elucidate the muted performance of gold despite safe-haven demand.
3. Considerations of opportunity cost:
Alterations in Treasury yields also affect the opportunity cost of holding gold. If Treasury yields rise, it may reduce the attractiveness of gold for investors, as gold does not provide cyclical returns.
4. **Systemic pressures on liquidity**:
Overall market liquidity dwindling may further compel certain investors to downsize their gold positions in order to comply with margin requirements or satisfy liquidity obligations in other markets, potentially creating downward pressure on gold prices in the short run.
Overall, the impact of the prevailing market environment on gold prices is intricate and multi-faceted. While safe-haven demand could bolster gold prices, the influence of a stronger dollar
The primary objective in Monday's FIBO EXT 2.0 circle has been achieved, and the ascent and purchase operation have been successful. During the Asian trading period on Tuesday, gold experienced an initial surge followed by a market correction, and it is anticipated that in the subsequent European and American trading sessions, a short position should be adopted instead of pursuing long positions.
Figure 1 illustrates the potential scenarios for gold in the upcoming London and U.S. trading sessions based on the 4-hour chart. The corrective targets are detailed in the chart accordingly. It is advised to await a new short entry signal on the 1-hour chart as part of the Tuesday plan.
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signalsofswingtrading.com
Wechat: ziyuvera
Tele: t.me/VeraFuntrader
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