Huge sell order hits sentiment to push bullion to six-week low

NEW YORK/LONDON — Gold tumbled to its lowest price in nearly six weeks as a large sell order hit sentiment on Monday, though losses were limited by political uncertainty around the world.

Spot gold was down 0.90% at $1,244.82 an ounce by 2:22 p.m. EDT (1822 GMT), having dropped as far as $ 1,236.46, its lowest since May 17 and just above the 200-day moving average.

‘SOMEBODY MADE A MISTAKE…’

US gold futures for delivery in August settled down 0.80% at $1,246.40, after making an $18 drop amid heavy volume to $1,236.50 and then rebounding by $10, all within 60 seconds around 4 a.m. EDT (0800 GMT).

The sale of 18,500 lots of gold, totaling 1.85 million ounces, and 5,000 ounces of silver in 5,500 lots on COMEX in a short space of time was behind falling prices, said Afshin Nabavi, head of trading at MKS in Switzerland.

“Clearly somebody sold it by mistake and bought it back quickly, triggering stops below $ 1,250,” said MKS trader Bernard Sin.

UBS trader Joni Teves said the sudden drop in price was amplified by a lack of liquidity as some Asian markets were closed for a holiday while London was just opening.

“Somebody’s made a mistake there. Stops get hit as we go lower and the algorithmic programs that jump on the back of momentum moves exacerbate the move,” said David Govett, manager of precious metals and foreign exchange for Marex Spectron.

“If it was a human error, they bought it back slowly over the day.”

Looking more broadly, traders said gold was supported by geopolitical uncertainty, a bailout of Italian banks, the policies of US President Donald J. Trump and the United Kingdom’s negotiations to leave the European Union, called “Brexit.”

GOOD INSURANCE

“The world is in geopolitical chaos and gold is still good insurance,” said MKS’ Mr. Sin.

Allegations of ties to Russia have cast a shadow over Mr. Trump’s first five months in office, while the British government’s looming Brexit talks are also fueling concern about global stability.

In Italy, the banking industry remains saddled with €300 billion ($335 billion) of soured debts.

Investors’ lack of interest in gold can be seen at SPDR Gold Trust, the world’s largest gold- backed exchange- traded fund, where holdings dipped on Friday last week.

Among other precious metals, silver fell by 0.50% to $16.60 an ounce and platinum slipped by 1.10% to $915.95.

Palladium edged up by 1.80% to $867.05 after recording its biggest intraday percentage decline since Jan. 25 on Friday. —