Gold traders shaken awake by Monday’s rapid price plunge said the move probably won’t mean an end to the sleepy pace that’s characterized the market in recent months.
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.”
Some 18,149 lots were traded on Comex in just a minute on Monday, 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 traded at $1,245.90 an ounce at 1:05 p.m. in Singapore on Tuesday.
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