Gold 'Flash Crash' as $2.7 Billion Worth of Gold Futures Sold in Less Than 2 Minutes

In what looked like another successful bid to manipulate the gold market lower, there was massive selling of gold futures contracts - some 700,000 ounces worth of gold futures in mere seconds. The equivalent of one-fifth of a whole day’s trade in a normal session, was sold in a concentrated manner in less than two minutes - pushing prices lower again.

Today’s AM LBMA Gold Price was USD 1,115.00, EUR 1,029.17 and GBP 717.41 per ounce.
Friday’s AM LBMA Gold Price was USD 1,143.00, EUR 1,049.25 and GBP 730.68 per ounce.

For the week, gold was lower in dollars and pounds but eked out slight gains in euros. Gold fell 2.5% to $1133.90 per ounce and silver fell 4.4% to $14.89 per ounce.

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This morning, massive concentrated selling in the futures market again led to sharp price falls and at one stage gold fell nearly 5% to below $1,100 per ounce. Gold in Singapore for immediate delivery fell sharply  while gold in Switzerland bounced higher from the intra day lows.

ANZ Bank analyst Victor Thianpiriya said in a note that the “nature, size and timing of the heavy selling” suggests someone “was taking advantage of low liquidity or some sort of forced selling had taken place.“

The sell off in the gold market spooked other commodities and most commodities are seeing sharp selling today, while stocks have continued to eke out further gains.

This is somewhat counter intuitive as the sharp falls in commodities in recent days suggest the global economy is weakening and threatened by deflation. Thus, stocks should be falling too. However, it appears that stocks are being supported by ultra loose monetary policies and currency debasement for now.

Gold looks horrible technically after having a fourth weekly loss last week. This is the longest series of price falls  since February. The price falls are despite strong coin and bar demand internationally. U.S. Mint gold bullion coin sales remain very robust and dealers, mints and refineries report robust demand - particularly in Germany and wider Europe and indeed in the U.S.

This suggests that we are close to capitulation and a bottom and gold looks very oversold. Gold mining stocks absolutely collapsed last week with the XAU index down 8.1% and the HUI index down 9.3% - another indication that we may be close to a bottom.

Although as ever we caution to never ‘catch a falling knife’ and $1,000 per ounce remains possible on the down side. Dollar cost averaging into a physical position remains prudent.

Silver for immediate delivery fell 0.6% to $14.84 an ounce. Spot platinum fell 1.1 percent to $984.51 an ounce, while palladium fell 1 percent to $611 an ounce.

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