QCP Quick Tech/Precious metal update: 12 Aug 2020
The magnitude of the overnight sell-off in US rates and Gold has caught us by surprise even. This looks a typical mean-reversion type move, with all the outperforming assets getting hit the hardest (Nasdaq, Bonds, Gold). In 2011 during the Gold uptrend, there were retracements of 10–12% at a time, so the scale of the sell-off isn’t too surprising. However 9.75% in just 4 days from Friday’s high to this morning’s low so far is a little worrying — especially when the Rates move is implying more downside to come. If we stay here without a bounce the TD 9 weekly on the Gold chart (Chart 1) could turn into a strong interim top.
Grayscale ETH and BTC were also not spared either, down 13% & 9% respectively even as the overall equity market was up. In this light, BTC/ETH spot has proven very resilient thus far. However based on the implied moves from those highly correlated assets we posted yesterday (Chart 2), it wouldn’t surprise us if BTC tested the 10.5k level again this week. Today’s EU/US session will be key in determining whether this cross-asset mean-reversion continues or if the Trend dip-buyers will finally come in.
