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DEUTSCHE BANK: The Hacked AP Tweet That Crashed The Market Revealed A 'New Reality For Gold'

Matthew Boesler   

DEUTSCHE BANK: The Hacked AP Tweet That Crashed The Market Revealed A 'New Reality For Gold'

Remember that fake AP tweet sent out by hackers that caused a mini market crash for a few minutes on Tuesday afternoon?

Deutsche Bank derivatives strategist Jens Johansen and his team say the market reaction revealed a "new reality" for gold.

In a note to clients, Johansen writes:

On Tuesday around 1:08pm a hacked tweet from a well-followed news agency appeared suggesting explosions White House. Markets across the board spiked down and recovered quickly as the tweet was confirmed hacked – well nearly across the board. Gold was a notable exception (see Figure 1 on page 2).

While equity fell around a percent and the dollar strengthened just shy of that against the yen, for example, gold barely budged. Moreover, our chart which shows prices at 1 minute increments shoe in exaggerated fashion that gold responded last. We feel this lends significant support to our commodities strategists’ view that there is a new reality for gold. Their current view is that gold ought to stabilize around 1300 (just about 10% below today’s level).

The chart below shows the reaction of gold to the fake tweet versus that of other markets.

Gold market reaction to fake AP tweet

Deutsche Bank, Bloomberg Finance LP


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