Gold prices fall 1% to hit near six-week low
london — Gold sank like a stone at 9am in London after a huge spike in volume in New York futures that traders said was probably the result of a “fat finger,” or erroneous order.
Trade shot up to 1.8 million ounces of gold in just a minute, a level not reached even with the surprise election of US President Donald Trump or Britain’s vote to leave the European Union.
“No one has a clue, apart from the unfortunate individual that pressed the wrong button,” David Govett, head of precious metals trading at Marex Spectron Group in London, said of the spike in volume. Thin activity and automated trading may exacerbate such moves, he said.
Others said a trader may have made a larger order than intended, or underestimated the market’s ability to absorb so much gold.
Some 18,149 lots were traded on Comex in just a minute, before falling back to 2,334 lots an hour later. Gold futures fell as much as 1.6 per cent to $1,236.50 an ounce on the Comex, the lowest for a most-active contract since May 17. It dropped through the key moving averages for the previous 100 and 200 days. The metal for August delivery was at $1,245.80 an ounce by 10:12am in New York.
The mysterious plunge “has the market spooked,” says Bob Haberkorn, a senior market strategist at RJO Futures.
Bullion pared losses after a report showed US orders for business equipment unexpectedly declined.
Rising use of computer-driven algorithmic trading has often been blamed for extraordinary movements in financial markets, known as flash crashes, in recent years.
“These moves are going to become more widespread with the way things are going,” Govett said by email.