The last time we presented unmistakable spoofing in gold futures on April 28 of this year, which happened just days after the CFTC came down on Nav Sarao as the scapegoat for the May 2010 flash crash in which he was accused of spoofing the E-mini future and as a result has been in prison ever since - it resulted, literally 2 days later, to the CME accusing Nassim Salim and Heet Khara of rigging the gold market using precisely this manipulative method.
The CME said on May 1:
[O]n multiple trade dates during the time period of March 1, 2015 through April 28, 2015, Salim engaged in a pattern of activity in which he repeatedly entered orders or layered multiple orders for Gold and Silver futures contracts without the intent to trade. Specifically, Salim entered these orders or layered multiple orders to encourage market participants to trade opposite his smaller orders resting on the opposite side of the book. After receiving a fill on his smaller orders, Salim would then cancel the resting order or layered multiple orders that he had entered on the opposite side of the order book.
Salim introduced Heet Khara (“Khara”), who is also the subject of a summary access denial action, to his first FCM and Salim had an account at the second FCM at which Khara traded in a disruptive manner. Further, it appears that on multiple occasions Salim and Khara coordinated efforts to engage in disruptive activity. In an example from April 28, 2015, Salim entered small-lot orders on one side of the market in Gold futures, after which Khara entered large orders on the opposite side. When Salim’s small orders were filled, Khara canceled the large orders. Salim has not responded to correspondence from the Exchange.
Since then there was little gold spoofing to note, perhaps because there was no need to spoof gold lower as a result of the sharp decline in gold prices, punctuated by last Sunday's brutal bear raid which took place out of New York just before China opened on Monday morning, which halted the CME gold futures market not once but twice.
Considering today's price action, if one were asked whether today's spoofing would take place on the bid or ask side, one would almost certainly be inclined to guess the "bid" considering the gradual rise in gold prices even as stocks are sliding.
One would be wrong.
As Nanex once again shows, having captured the exact "spoofing" moment, the action was all on the ask side, with a "spoofer" first representing a large sell order, and sending gold lower after 2:41pm, which remains on the order book, but which promptly vanishes once the actual price of gold crossed into the spoofer's "ask" following a subsequent ramp at 4:51pm.
Was the intention of today's spoofer to keep and push the price of gold under $1,100 and keep it there to avoid breakouts (where it remains since breaking above $1,100 briefly)? We don't know with certainty but we are confident that both the CME and CFTC will get right on this and give all those who believe in "fair and efficient" markets the answer, as well as charge the guilty spoofer to the full extent of the anti-manipulation law.
Or maybe prison cells and 100+ year sentences are only reserved for those who dare to spoof the "wealth effecting" S&P500 lower?