We have been seeing a rise in geopolitical tensions over the last month or so as North Korea continues to test missiles and threaten the US. This has led to an increase in geopolitical tension in the region, affecting South Korea and Japan too.
Brokers Issue Precautionary Warning
As a precautionary measure on account of this tension, 3 major brokers in Japan – GMO, Gaitame and FCTrade (FXTF) – have issued warnings to their clients saying that the upcoming days could see a lot of volatility.
They warn of sudden price movements, increases in spreads, and limit and stop orders not being filled due to lack of liquidity or sudden market movement.
KVB PRIME Strikes UK with Influential Finance Summit SponsorshipGo to article >>
They also said that this could be especially true on Mondays, and if there are any major developments over the weekend, then the market could open with a large gap – leading to orders getting filled at completely different prices.
Gaitome also fears that there might be further provocative action around North Korean National Day on September 9.
The increase in global risk has led to some choppy markets and this has in turn affected gold prices as well. Global tension always puts doubts in the minds of the investors, who pull funds from the stock market to put into safer assets such as gold, which is considered a solid investment.
This is why we have been seeing gold prices moving higher and stock markets moving lower whenever North Korea rears its head.
The brokers warn clients to be careful and trade in a responsible manner as they do their best to deliver stable rates and as high liquidity as possible.