Gold sank like a stone at 9 a.m. in London after a huge spike in volume in New York futures that traders said was probably the result of a "fat finger," or erroneous order.
Trade shot up to 1.8 million ounces of gold in just a minute, a level not reached even with the surprise election of U.S. President Donald Trump or Britain's vote to leave the European Union.
"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, said of the spike in volume. Thin activity and automated trading may exacerbate such moves, he said.
Others said a trader may have made a larger order than intended, or underestimated the market's ability to absorb so much gold.
Some 18,149 lots were traded on Comex in just a minute, before falling back to 2,334 lots an hour later.
Gold futures fell as much as 1.6 percent to $1,236.50 an ounce on the Comex, the lowest for a most-active contract since May 17. The metal for August delivery settled at $1,246.40 an ounce at 1:37 p.m. in New York, below the 100-day moving average.
The mysterious plunge "has the market spooked," says Bob Haberkorn, a senior market strategist at RJO Futures.
'Muppet' Trade
"This bears the hallmarks of a fat-finger 'Muppet' — a trade of 18,149 ounces would be a very typical trade, but a trade of 18,149 lots of a futures contract (which is 100 times bigger) would not be," Ross Norman, chief executive officer of Sharps Pixley Ltd., a London-based precious-metals dealer, said in a note.
