Gold price tarnished by trader’s fat finger

A ‘ FAT- fingered trader’ sent the price of gold spiralling after accidentally selling 1.8m ounces in one hit.

Traders said the sale had likely been a mistake as the price of gold dropped to $1,236 an ounce in the few hours after the market opened – its lowest in more than a month.

The price plunged at 9am as a City dealer made the mistake, moving a higher volume than was even seen in the market panic that followed Donald Trump’s election or the Brexit vote.

Ben Kumar, investment manager at 7 Investment Management, said: ‘I think it always gives people a bit of pause for thought to see a market can be moved like this. It’s hard to understand how it happens, with all the checks and balances in place, but there is always the possibility that someone adds an extra zero to a trade and it has these unintended consequences.’

It is also possible that a compu- ter algorithm is to blame for the trade. Computers are programmed to do traders’ jobs for them and to buy or sell company shares or commodities such as gold based on complicated number-crunching. But they can get things wrong, leading to socalled flash crashes in the market. Tom Becket, chief investment officer at Psigma Investment Management, said: ‘It could be that this was a computer algorithm. There are risks to auto- mated trading and it can lead to big spikes or falls in the market which can’t be explained.’

Experts said a lower level of trading in the summer months could also mean that an erroneous trade could have a greater effect than usual.

The precious metal fell as much as 1.6pc yesterday morning, taking silver and platinum with it. They fell 1.1pc and 1.3pc respectively as trading began.

But Becket added that the fall in the gold price could be a good opportunity to buy.

He said: ‘Investing in gold is a sensible move at the moment, with so much political uncertainty across the world.

‘The gold price is up almost 10pc since the start of the year and I expect it to go up further.’

Gold is often seen as a safe place to invest at times of uncertainty as it is a physical store of value.

The prices tend to rise when investors are fearful and fall again when they are confident.

Gold hit a record high in the midst of the financial crisis in 2011 when it reached almost $2,000 an ounce.