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Shortly after the opening of trade on the Comex market in New York on Friday the gold price plunged more than $30 an ounce to an almost three-month low of $1,259.60 an ounce.
MarketWatchreports a spokesperson for Chicago’s CME Group, which operates Comex, said at around 8:42am Eastern time a 10-second stoppage occurred:
“Scott Carter, CEO at precious metals retailer Lear Capital, said the halt happened after a two-million ounce trade, but it wasn’t clear who was behind the trade.”
CME commentedthis way on the price action on Friday:
The market was caught on a week ending liquidation binge today that was clearly exaggerated by technical stop loss selling, a decline in safe haven interest and perhaps even because of periodic strength in the Dollar.
With a temporary mechanical halt in gold trading today, because of volatility safety type devices, the downside action in gold created enough headlines to at least partially signal capitulation by the bull camp.
However, it is also possible that some funds and or larger spec positions were simply forced to race for the exits today as the market fell through a series of key chart support levels.
FLASHBACK: One short seller’s ‘shock & awe’ crushed gold with a 400 tonne trade
This is what Friday trading (UTC-time) in gold looked like:
The paper gold market has grown exponentially in recent years and is one of the most leveraged financial markets.
According to one study by the London Bullion Market Association, total trading volume in 2011 amounted to 50 billion ounces.
That equates to 600 times annual global gold mine output and many times the total number of tonnes of the precious metal ever mined.
This chart shows just how liquid the gold market has become with $240 billion in trading volumes each day, more than some major currency pairs and the S&P 500 and the Dow Jones.
Year to date the gold price has retreated more than 23% and looks set to end its more than a decade long bull run in 2013.
5 Comments
NM
Long term Gold is a Hold.
ken
How long? Could be 6 months to 5 years but the derivatives are driving the market. Within 6 months to a year my prediction is that physical gold delivery will cost 20% more than the forward derivative trade. The banks will stop trading in metals derivative trading altogether because they will not be able to insure delivery. I still see a silver trade as a better choice. American Eagles at $2.00 over spot might increase in value 100% in less than 12 months if Obama and his cohorts manage to destroy the entire financial system with the weak GOP helping them as much as they can.
GoFig
The plunge has been predicted but is only a signal to hold physical gold as the plunge is being orchestrated to bring the price down to push people out of the market to allow for the real buying and the surge in gold price to begin. How long? I plan to hold my gold until 2020. Then we will look back at this time period and see with 2020 hindsight.
Apple
This appears to be deliberate market manipulation. Nothing to do with real market drivers like supply and demand. In the paper gold market I doubt the seller of the 2 million ounces even held the gold, even on paper. I not would be surprised that it was a naked short sale and the seller has already covered and made a quick $30 to $50 million profit. This hurts legitimate producers and traders. It is about time the gold market gets cleaned up before some meltdown like the US and European housing markets.
sailormac
You need a few gold and silver coins in your cupboard in the (unlikely) event that you may have to gird your loins and flee. Otherwise , metal is a bad investment.