Yesterday Switzerland essentially pegged the Franc to the 1.15 level on the Euro or lower. This dealt a 15% loss to those who bought the Franc at the top and a nearly 10% overnight loss, which is enormous for a currency. The Swiss Franc has been a big safety trade like Gold, the Yen and US Treasuries.
One would think that as one safe haven has been destroyed other safe havens like Gold would increase in value. Especially because it is impossible to devalue Gold. As the supply of safe havens go down, the value of the remaining safe havens should go up. While this may be true in the long run, in the short run that is not what happened. Many people who held the Franc also held Gold. As one trade went against them they fled the other trade as well and gold has been dealt severe losses.
Many might find it odd that I talk so much about sentiment and ignore the news headlines of the day. The reason is because when everybody is bearish there are few left to sell, regardless of the headlines. Maybe all these negative headlines will matter in the long term but in the short term the overwhelmingly bearish sentiment is more important. Sometimes it is not the news or the fundamentals that are most important but understanding how markets work.