$500 billion in gold futures in a single trade

This morning gold dropped about $30/oz briefly when 4,200 futures contracts were sold in a single trade. At 100 oz/contract, that about $500 billion in nominal value. That's a lot for a single trade. A 1% move in gold around this price is plus or minus $5 billion. Who would make such a trade? Article below:



January 6, 2014, 12:26 PM ET
Gold market ‘flash crash’ explanations vary from ‘fat finger’ to ‘price manipulation’




Gold futures suffered a sudden, brief drop in prices early Monday on the Comex division of the New York Mercantile Exchange, with market watchers blaming the move on everything from a “fat finger” to trader liquidation to price manipulation.

According to Nanex (that’s its chart above), a trade of about 4,200 contracts sent February gold GCG4 tumbling by $30 an ounce on heavy volume at around 10:14 a.m. Eastern and triggered a 10-second trading halt. Prices fell from about $1,245 to around $1,215 an ounce in just moments. The crash came about 14 minutes after the release of U.S. factory orders and ISM services index data.

Phil Flynn, a senior analyst at Price Futures Group, at first said the drop looked like it was due to a “fat finger,” then added there was speculation over a broker liquidating positions.

Mark O’Byrne, executive director at GoldCore, said the “flash crash today had the hallmarks of price manipulation.” Still, “as ever, it is nearly impossible to tell and could have been a fat finger trade or a large fund or bank liquidating a gold position.”

Meanwhile, Ross Norman, chief executive officer at Sharps Pixley, said that the move “looks to be shorts defending their substantial positions.” But “some of us have doubts, which makes gold a steal at these prices,” he said. “In fact, [it’s] the cheapest insurance in town against economic difficulties.”

February gold was last up $1.80, or 0.2%, at $1,240.40 an ounce on Comex.

Now the real question is whether the U.S. Commodity Futures Trading Commission and exchange “will investigate and try to actually enforce its regulations,” said Brien Lundin, editor of Gold Newsletter.

“Apparently there was no investigation into the mid-April episode where gold contracts were dumped simultaneously to push the price through sell