Welcome back,
Yesterday itself, I talked about how gold was pumping at a rate which was not acceptable, and people were coming in with fear of missing out, thinking that they could open long positions and earn good money.
But they forgot that it was a very risky situation. Even some of my friends from the crypto market and the stock market, who trade in both, tried to take advantage of the situation gold was going through.
I am someone who always prefers to take the safer side of the road, and that is why chasing profits in such a situation, especially in gold, felt extremely risky to me. Today, it has been proven why it was risky.
Just two days back, gold was trading around $5,600 USD per ounce, and today it has fallen to as low as $4,950 USD per ounce, which is a massive drop. If we calculate the total loss in just the last 2 days, less than 48 hours, it comes to an 11% dump in gold prices.
If someone opened a long position without proper risk management, there is a high chance that they got liquidated. That is one of the reasons why around $2.5 trillion USD was liquidated from the gold market itself.
This amount is equal to the entire market capitalization of the crypto market. Gold managed to wipe out that much money in just 30 minutes.
And believe me, this is not a one time event. You can experience the same situation again, because you never know what will happen in the coming days.
Personally, I still believe that gold might correct further, possibly down to $4500-4600 USD per ounce, because since January 23rd, gold has pumped extraordinarily, especially over the last week.
If you are thinking about making profits in gold, you might be right, but it comes with a very big risk. When an asset behaves in a way it never has in the past, that itself is a warning sign. You need to be extremely careful.
Make sure you manage your risk properly, otherwise you can easily wreck your portfolio and face liquidation. Always use only a small portion of your portfolio before diving into such situations.
Gold and silver are still in the headlines, but nobody knows what will happen next. So please be careful. That is all for this blog.
Thank you and happy trading everyone.