Gold price suppression theory mainstream after single $650 million sell trade

Today’s AM fix was USD 1,255.50, EUR 929.59 and GBP 787.79 per ounce. Yesterday’s AM fix was USD 1,276.00, EUR 941.49 and GBP 799.50 per ounce.

Gold inched up $2.50 or 0.2% yesterday, closing at $1,272.70/oz. Silver slid $0.03 or 0.14% closing at $21.26. Platinum climbed $12.80 or 0.9% to $1,376.50 /oz., while palladium rose $0.09 or 0% to $711.59/oz.

Gold In USD, 3 Days - (Bloomberg)

Gold snapped a four-day losing streak yesterday, but is under pressure again today. Gold traded in a narrow range overnight prior to aggressive selling that saw gold fall to $1,255/oz. Gold is hovering near three month lows despite the political shenanigans and impasse in Washington.

Gold, whose safe-haven appeal is usually burnished during times of geopolitical and economic uncertainty, has failed to gain despite protracted wrangling over the fiscal deadlock in the United States.

It has dropped about 5% toward $1,250/oz. since a partial government shutdown began on October 1 and this is, in conjunction with frequently strange trading patterns is leading to deepening concerns about price suppression.

The massive single sell trade on Friday, estimated to be worth a staggering $650 million, which knocked prices $25 lower in three minutes and the poor performance of gold despite the appalling political chicanery in Washington and the U.S. fiscal and monetary position is leading to more questions regarding price manipulation and suppression.

Alex Rosenberg, a producer at CNBC (click on link for story) wrote the following:

“Gold dropped $25 in two minutes Friday morning following what appeared to be a single massive sell order, and professional traders are now pronouncing the sale a deliberate attempt to manipulate the market.

At 8:42 a.m. ET Friday morning, a firm appeared to sell 5,000 gold futures contracts "at the market," meaning at whatever price was available. The massive order was more than the market could take at once and led the CME to automatically halt trading for 10 seconds.

Eric Hunsader of Nanex told CNBC.com on Friday that 2,700 contracts were sold, which triggered the halt, and that the remaining 2,300 were sold once the market resumed trading. Since one futures contract controls 100 troy ounces of gold, and each troy ounce was worth $1,285 at the time of the sale, this party was selling some $640 million worth of gold in one shot. And it overwhelmed the liquidity in the market.

"Anyone with knowledge of the size and volume in the market would absolutely never, ever place a 5,000 [contract] sell [order] at market, because you could not estimate the offset price," said iiTrader CEO Rich Ilczyszyn.

If Ilczyszyn's firm were placing the order, he said, "we generally would piece the order in to work a better price." That's why he believes the trade was "an error."

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