After hitting new all-time record highs in both the NASDAQ composite and S&P 500, profit-taking and selling pressure today took all three major indexes dramatically lower. The largest drawdown today occurred in the indices that has performed the best of all three major indexes, the NASDAQ composite.

Gold and silver both traded dramatically lower as market participants focused upon risk-on assets with stocks globally moving higher, this includes indices in the United States closing at new all-time record highs. The NASDAQ composite gained 116 points, and is currently fixed at 12,056.44.

Today gold futures, basis the most active December 2020 contract flirted with $2000 per ounce, when it traded to an intraday high today of $2001.20. As of 4:53 PM EDT the December contract is currently fixed at $1,977.40 which is a net decline of a $1.20. There were both positive and negative technical indicators when we look at today’s price activity, and specifically focus upon the range.

As the last trading day of the month concludes, we can say that although gold closed slightly lower than the previous month. But that is not the whole story as the last two months have been stellar in terms of gains made in the precious yellow metal. This month gold traded to its highest price on record.

The ‘J. Powell Paradox’ is a scenario in which the Federal Reserve begins to send out signals indicating moves in the future, which are then backed up by a more comprehensive explanation of what the Fed is planning on doing, and their intent or desired result from these actions. However, market participants are not quick to react to the anticipated changes.

Today traders witnessed one of the more volatile trading sessions, trading in double digits lower, double digits higher and closing lower under pressure.

According to Wikipedia, “The cobra effect occurs when an attempted solution to a problem makes the problem worse, as a type of unintended consequence. The term is used to illustrate the causes of incorrect stimulation in economy and politics.”

It seems as though traders and market participants are favoring the risk on asset class, even during a global pandemic which has truly been at the root of economic contractions in countries worldwide. Overseas global stock markets were higher today, and the Standard & Poor’s 500 is currently trading at an all-time record high.

Since 1978 the Federal Reserve of Kansas City has been sponsoring an annual economic symposium. Central bankers and finance ministers from around the world attend the symposium to focus upon critical economic issues. Former Federal Reserve Chairman Ben Bernanke moved the venue to Jackson Hole Wyoming in 1981.

Although the recent price decline in both gold and silver seems to be slowing down, it is evident from today’s price action that the potential for more downside in both assets still exists.