Gold In Asian Liquidation Mode

As Asia opens to the bloodbath that occurred in precious metals on Friday in the US, it would appear that more than a few traders got the ‘tap on the shoulder’. Shanghai futures are limit-down and spot gold and silver prices are plunging once again as we suspect forced margin-calls and the raising of cash (to cover extreme variation margin – or capital reserves) needed in JGB positions, as we explained here. Liquidation is certainly the theme of the evening – investors are selling JGBs (6th day in a row of multiple-sigma moves in long-dated Japanese bonds 30Y +56bps off its post-BoJ lows at 1.60%!), selling Japanese stocks (Nikkei -128 pts, second biggest down day post-BoJ), selling US Treasuries (futures down), selling gold and silver (gold spot down over $100 from Friday’s highs), and despite selling JPY early (retracing 30% of the weakness post-BoJ), JPY is practically unchanged (jerking lower only on the US futures open and Asian equity open) – it seems Mrs.Watanabe is struggling and unwinding some her excessively short JPY and long NKY positions.

 

Gold down over $100 from Friday’s highs…

 

 

Another day, another 4-sigma move in JGBs…

    

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