Mysterious Two Million Ounce Gold Trade Shakes Markets

two million ounce trade gold

Friday 8/25/2017

The markets were rattled Friday when a two million ounce gold trade.  In a about one minute, gold futures contracts equaling close to 2 million ounces traded about 20 minutes before Federal Reserve Chair Yellen was to speak at a gathering of policy makers in Jackson Hole, Wyoming.

gold futures

From Bloomberg…
“The episode jolted the market after a measure of 60-day volatility on the metal touched the lowest since 2005. Gold had been in quiet mode even amid political discord in Washington, concerns about rising U.S. interest rates and tensions between the U.S. and North Korea. Yellen’s speech, which lacked clear rate cues, did little to calm the price swings and damped expectations of a rate hike this year.”

From MSN Money…
“Bullion sank at 9 a.m. in London on Monday after a huge spike in volume in New York futures that traders said may have been the result of a “fat finger,” or erroneous order. Trading jumped to 1.8 million ounces of gold in just a minute, an amount that’s bigger than the gold reserves of Finland.

The episode is unlikely to upend the broader trend in gold, where volatility has languished, analysts including George Gero at RBC Wealth Management said. A measure of price swings in the metal fell in April to the lowest in records going back to 2007. It’s since held near that level, even amid political discord in Europe, rising U.S. interest rates and mounting tensions between the U.S. and North Korea.

“You haven’t seen volatility when volatility was warranted,” said Gero, a New York-based managing director at RBC. “You’ve got a host of important matters that could have moved gold much more than they did. Whenever there’s an event-driven rally, it doesn’t seem to last.”

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