Friday morning saw gold drop $25 an ounce in two minutes due to a single sell order that triggered a large number of smaller, automated sell orders. The plunge brought gold down to a three-month low and even caused a halt in trading.
Eric Hunsader of Nanex told CNBC, “It appears to have been an order to sell 5,000 gold futures contracts at market. About 2,700 went off and tripped the stop logic, halting gold futures for 10 seconds while liquidity replenished. When enough liquidity returned (after 10 seconds), the balance of about 2,300 completed.”
According to Chris Grams of the CME Group, the event triggered their “stop logic,” which is designed to momentarily pause trading in order to give the supply a chance to build back up again. He confirmed that “all trades stand” and that their technology “performed as designed.”
For some reason American investors still remain hesitant to buy physical gold, while Chinese and Indian markets, as well as central banks worldwide, continue to gobble up the yellow metal at an ever increasing rate. Experts recommend investing physical gold as a hedge against inflation and volatile markets, both of which are on the verge of growing with the debt ceiling deadline looming. Gold finished the day at $1,269 an ounce, down 2.89 percent.