Another day, another massive sell off and rally. The close to the markets yesterday re-illustrated the illiquid nature of the futures markets, specifically the equity markets and long term fixed income markets.
Today certainly appears to be a corrective move both domestically and abroad following yesterday`s dramatic near record-setting selloff in the equity index markets. With the Dow down nearly 1200 points at one time and the S&P 500 off nearly 150 points, the market was headed for the single worst day in history before some furious buying staved off that dubious title.
By far the biggest storyline in the markets this week has been the precipitous fall in the price of gold. After closing just below key support at the 1140 level last week, bullish traders panicked this week, driving the yellow metal down by a whopping 5% from last Friday’s close as of writing.
If China were to partially back its yuan with gold it would require a gold price of $64,000 per ounce, 50 times gold bullion’s price today, according to a recent article from respected Bloomberg Intelligence. It seems like an outlandish forecast.