Following a huge spike in volume in New York futures, credited to an “erroneous order” or the result of a “fat finger”, gold plunged in early trading in London, news agency Bloomberg reported. In less than a minute, the trade rose to 1.8 million ounces of gold, an unprecedented level that did not even reach following Donald Trump’s election or Brexit.
“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 was quoted as saying. He added that “thin activity” and automated trading could aggravate such events. According to some, the spike in volume could have been caused by a trader making a larger order than intended or underestimated the market’s ability to absorb so much gold.
The value of gold fell as much as 1.6 per cent – to $1,236.43 an ounce – the lowest since May 16. Its value dropped through the key moving average for the previous 100 days, and went on to even touch the 200-day figure.
Such movements in financial markets in recent years have been attributed to the rise in use of computer-driven algorithmic trading. “These moves are going to become more widespread with the way things are going,” Govett told Bloomberg. “The more they happen, the worse they will become as people back away from holding positions.”