Dear XBTFX traders,

Please be informed that high volatility across the markets is leading to sharp moves in indices and currencies. As a result, spreads in the spot market have widened dramatically.

Specific to XAUUSD, trading conditions are notably worse in the past 24 hours. Kindly remain aware and vigilant of the increased risk and spread on XAUUSD trades because pricing may be erratic and intermittent in the coming days.

One of the key drivers of the XAUUSD dislocation seems to be arising from the exchange for physical ‘basis’ – aka the cost to swap Futures into OTC (spot) XAU - is essentially closed.

Many eFX LPs simply quote retail venues a spot price in XAU and then hedge into the Futures market. Essentially, LPs are taking a risk on the implied ‘basis’, skewing prices to try to attract flow that will reduce their risk. The USD funding squeeze has put significant pressure on LPs who are all generally short ‘basis’.

Refineries in Switzerland have also shut down and physical delivery of Comex Gold has been made nearly impossible because of flight restrictions, making it harder to physically deliver bullion to cover shorts.

We are not expecting pricing/liquidity to resume to more normal levels for a number of days but will do everything to work with our LPs to ensure the best possible pricing and execution for our clients.

We're here to help, If you have any questions about this or need assistance with your account please contact support@xbtfx.io .


Sincerely,
XBTFX Team
https://XBTFX.io