Gold held near its lowest level in more than five years early on Tuesday after tumbling more than 4 percent the session before in an early-Asia rout, pulling bullion below the key US$1,100 support.
Monday's selloff began shortly after the Shanghai Gold Exchange opened trading when liquidity was thin and investors are eyeing the bourse for any further selling pressure.- Reuters
Earlier Tuesday morning report
NEW YORK/LONDON: Gold prices plunged more than 4 percent to five-year lows on Monday as a sudden bout of selling across Shanghai and New York markets during the illiquid early Asian trading hours triggered a mini flash crash, deepening bullion's biggest rout in years.
A wave of sell orders in a one-minute period shortly after the Shanghai Gold Exchange opened on Monday sent the most-active U.S. gold futures contract <GCv1> down $48 to as low as $1,080 per ounce, its weakest since February 2010.
Within two minutes, an estimated 33 tonnes of gold in Shanghai and New York worth $1.3 billion changed hands. A lack of liquidity, with Japanese markets closed for a holiday, hastened the slide.
The ferocious selling triggered CME circuit breakers twice within one minute just before 9:30 p.m. EDT (0130 GMT) on Sunday.
The exact cause of the selling was not immediately known, but traders and analysts attributed the massive move to high-frequency trading algorithms as well as stop-loss selling.Monday's selloff began shortly after the Shanghai Gold Exchange opened trading when liquidity was thin and investors are eyeing the bourse for any further selling pressure.- Reuters
Earlier Tuesday morning report
NEW YORK/LONDON: Gold prices plunged more than 4 percent to five-year lows on Monday as a sudden bout of selling across Shanghai and New York markets during the illiquid early Asian trading hours triggered a mini flash crash, deepening bullion's biggest rout in years.
A wave of sell orders in a one-minute period shortly after the Shanghai Gold Exchange opened on Monday sent the most-active U.S. gold futures contract <GCv1> down $48 to as low as $1,080 per ounce, its weakest since February 2010.
Within two minutes, an estimated 33 tonnes of gold in Shanghai and New York worth $1.3 billion changed hands. A lack of liquidity, with Japanese markets closed for a holiday, hastened the slide.
The ferocious selling triggered CME circuit breakers twice within one minute just before 9:30 p.m. EDT (0130 GMT) on Sunday.
"It was just a bit of a bear raid and there was nobody on the other side to mop up the selling," Societe Generale analyst Robin Bhar said.
Prices recouped some losses by the end of trading in New York, but the latest slide helped wipe out half the gains from the last decade's historic bull run, taking prices back to a key chart level and threatening a break towards $1,000 an ounce.
The breadth of the latest sell-off will underscore bullion's worsening outlook as the dollar <.DXY> strengthens and investors brace for the U.S. Federal Reserve to raise interest rates for the first time in nearly a decade.
The dollar hit a three-month high against a basket of currencies, making dollar-priced gold more expensive for holders of other currencies.
The selling followed China's Friday announcement that it increased its gold reserves much less than expected over the past six years.
No comments:
Post a Comment