TechFlow News, February 6: Analyst Jeremy Boulton stated that the sudden drop in gold prices—which quickly spread to other metals—could trigger a chain reaction, prompting investors to take profits or even sell fundamentally sound assets to cover losing positions. Currently, markets hold substantial unrealized gains awaiting realization; aside from AI-related stocks, equities overall remain robust. In foreign exchange markets, investors who pursued carry trades over the past year—allocating capital to high-risk, high-yield currencies—have also reaped considerable profits. Although such bets carry elevated risk, their returns have been exceptionally lucrative—similarly true for equity and euro investments.
During the trade war, the euro surged significantly, reinforcing its market perception as “safer than the global reserve currency.” When gold prices declined, the euro-dollar exchange rate fell in tandem, prompting traders to lock in profits. Although long-euro positions are not as crowded as those in gold, overbought signals emerged during the euro’s move above 1.20. According to CME Group data, the $20 billion positioning betting on euro appreciation exceeds that of any other currency pair. As risk aversion intensifies, the U.S. dollar—previously sold off—is now being repurchased, providing traders with further impetus to take profits. (Jinshi)
