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Gold’s London AM fix this morning was USD
1,661.25, EUR 1,253.02, and GBP 1,024.70 per ounce. Yesterday's AM fix was
USD 1,662.50, EUR 1,256.61 and GBP 1,021.44 per ounce.
Silver is trading at $30.85/oz,
€23.37/oz and £19.10/oz. Platinum is
trading at $1,570.00/oz, palladium at $677.60/oz and rhodium at $1,350/oz.
Gold rose $3.80 or 0.23% in
New York yesterday and closed at $1,666.10/oz. However, there were more
peculiar goings on in the gold market which saw one massive sell order knock
prices lower, prior to gold gathering itself and moving higher.
Cross Currency Table – (Bloomberg)
Bullion traded sideways in Asia before slight weakness
and has dipped marginally in early European trading.
Gold may complete its 6th day of price increases, its
best run since August, as business activity in the US expanded at its slowest
pace since November 2009, creating demand for gold as a heading instrument
and a safe haven.
Gold’s technicals are
mixed after April’s slight loss (-0.2%) meant that gold has now had 3
consecutive monthly losses - the first since 2000.
However, gold has a bullish outside reversal week last
week and the higher quarterly close of a 6.7% gain in Q1 2012, and 11
consecutive years of annual gains mean that the long term technicals
remain favourable.
Bullion is now 6.5% higher this year and heading for
its 12th straight annual advance as demand continues as a hedge against
inflation and central banks continue to debase fiat currencies.
Fed Chairman Ben Bernanke said April 25 that he’s
prepared to “do more” if needed to spur the economy.
Investors are watching weekend elections in France
& Greece and a European Central Bank meeting on Thursday, after data
showed that Spain sank into recession in the first quarter.
Palladium hit its highest price in 6 weeks and is
trading near $686.75/oz.
Manipulative Gold ‘Fat Finger’ Or Algo Trade Worth $1.24 Billion
The gold
market was briefly shaken by an unusually large early morning sell order, which
triggered a brief trading halt in gold futures and left traders questioning
whether the transaction was a mistake and the motivation of the seller.
Gold 3 Day Chart – (Bloomberg)
Gold fell $14 in one minute despite no breaking
financial and economic news and despite no movement in the dollar, oil,
equity or bond markets.
There was only the insignificant personal income and
spending numbers – which came in slightly better than expected and
could not justify such quick falls.
CME Group Inc's Comex division recorded an unusually large transaction of
7,500 gold futures during just one minute of trading. The sale took out
blocks of bids as large as 84 contracts in one fell swoop and cut prices down
$15 to $1,648.80 a troy ounce.
The sharp losses triggered a 10-second trading halt in
June-delivery gold futures, CME told Dow Jones Newswires Tatyana Shumsky.
"The market was given a short period to
recalibrate and ... it was for 10 seconds," a CME spokesman said.
"It only happened in gold futures, in the June gold contract."
Gold traders buzzed with speculation that the
transaction was an input error - a so-called "fat finger" trade.
"Or a Gold Finger as it might be known in the bullion market,"
traders at Citi joked in a note to clients.
The massive size of the transaction - 750,000 troy
ounces worth more than $1.24 billion – led to speculation that it was
either a mistake by a trader or that an entity wished to manipulate the
market lower.
Such large trades have frequently been seen at month
and quarter beginning and ends. Yesterday was the last trading day of the
month. They have also been seen when Ben Bernanke has been making important
statements regarding the dollar and the outlook for the US economy.
The nature of the massive sell order, one of many seen
in recent months, suggested that the seller was not motivated by profit and
may have had other motives. Such large trades are rarely conducted amid very
thin trading volumes.
Trading yesterday was expected to be quiet as market
participants in China and Japan were out on holiday and many European traders
were preparing for May Day holidays today.
"No one who has the account size and the money to
trade thousands of gold contracts would do it in one transaction; that's just
stupid," said one trader.
Silver 3 Day Chart – (Bloomberg)
It seems likely that the seller was either a large
hedge fund or institution as the collateral required to purchase 7,500
contracts is high. The seller would have had to have deposited $ 75.9 million
in cash with a broker.
There was a suggestion in the Reuters Global Gold Forum
that the selling may have been due to algorithm trading or computer driven.
The trade could be as a result of the shift to
electronic trading. Computer trading systems are vulnerable to input errors,
as they do not ‘question’ the order before executing the
transaction.
By contrast, when most order flow would pass through
the Comex floor where human traders processed the
deals, potential errors stand higher chances of being intercepted and there
is a higher level of transparency.
"You would definitely [verify a trade this big]
before you executed it," said one Comex floor
broker.
However, the trade is unlikely to have been a keystroke
error as silver also saw substantial selling at the same time and similar
price falls.
This suggests that the seller wished to see gold and
silver prices lower. Some traders suggest that there may be High Frequency
Trading (HFT) programmes that can see where stop
loss orders are placed and sell in order to force stop loss selling –
then buying back and thus making a quick profit.
It will further fuel allegations that certain Wall
Street banks, either alone or in conjunction with the
Federal Reserve and US Treasury, are intervening in and manipulating
prices in the precious metal markets.
The Gold Anti Trust Action
Committee (GATA) and other knowledgeable market participants have alleged
that this is continuing to be done in order to maintain faith in the US
dollar and the US capital markets.
OTHER NEWS
(Bloomberg) -- Comex Suspended Gold Trading
After Price Plunge, Dow Jones Says
Comex halted trading in gold futures for about 10
seconds yesterday after prices plunged, Dow Jones reported, citing an
unidentified spokesman for the exchange.
The so-called Stop Logic halt began at 8:31 a.m. in New
York on June futures, the news agency said.
(Bloomberg) -- U.S. Mint Gold-Coin Sales Tumble to
Lowest Since June 2008
The U.S.
Mint sold 20,000 ounces of American Eagle gold coins in April, the lowest
monthly total since June 2008, as signs of an improving U.S. economy boosted
equities and eroded demand for the precious metal as a haven.
Sales plunged 68 percent from 62,500 ounces in March,
according to figures on the Mint’s website. American Eagle silver-coin
sales tumbled 40 percent to 1.52 million ounces in April, the lowest since
February, the data show.
Investors preferred equities over gold as corporate
earnings beat analyst forecasts and U.S. economic growth accelerated,
according to Terry Hanlon, the president of Dillon Gage Metals. Bullion has
gained 6.2 percent this year, while the Standard & Poor’s 500 Index
of shares jumped 11 percent.
“People chose equities over gold and
silver,” Hanlon said in a telephone interview. Addison, Texas-based Dillon
Gage is one of 11 dealers authorized to purchase bullion coins directly from
the mint.
Gold futures for June delivery fell 60 cents to settle
$1,664.20 an ounce on the Comex in New York. Prices
dropped 0.5 percent in April, capping a third straight monthly loss, the
longest string of declines since March 2001.
The mint sold 15,000 ounces of gold coins in June 2008.
(Bloomberg) -- Jeremy Charles Will Retire as
HSBC’s Head of Precious Metals
Jeremy
Charles is retiring as global head of precious metals at HSBC Holdings Plc after almost four decades in the business that took
him from “tea boy” to chairman of the London Bullion Market
Association.
He will leave his position in London at the end of
June, Charles, 56, said yesterday. David Rose at the bank’s London
office and Paul Voller in New York, both with more
than 25 years of experience in the industry, will take over responsibility
for HSBC’s precious metals business, he said.
Charles began his career in gold as the “tea
boy” at N.M. Rothschild & Sons Ltd. in London in 1975. He moved to
Johnson Matthey Bankers in 1978 and stayed with it after it was taken over by
the Bank of England in 1983 before being sold to Westpac Banking Corp. in
1984, Republic National Bank in 1992 and then HSBC in 1999. He witnessed the
longest-ever gold “fixing,” when banks set a daily benchmark
price, and worked during the Brink’s-Mat Heathrow airport gold robbery
in 1983.
“I didn’t want to be one of those people
who carried on just for the sake of carrying on,” Charles said
yesterday in an interview. “The new challenges are for our talented
younger people to carry on through. The Asian markets in particular are
liberalizing, which in turn is creating new and exciting potential for growth
and development.”
Bullion for immediate delivery surged almost 12-fold
since 1975 to $1,663.50 an ounce today. It reached a record $1,921.15 in
September as it climbed for an 11th consecutive year. The longest bull run in
at least nine decades has seen investors accumulate more metal in
exchange-traded products than the holdings of all but four central banks.
Banks are buying more gold to diversify currency reserves.
LBMA Chairman
There are 27 people globally directly reporting to
Charles, with a total of about 70 including those supporting the global
precious metals business, he said. His “proudest” career
achievement was as LBMA chairman from 2006 to 2009, he said. He will resign
from his post as director of gold, silver and platinum fixings on retirement.
Charles took part in his first fixing while working for
Johnson Matthey, witnessing a then-record price of $850 an ounce and the
longest fix which took more than two hours in the early 1990s, when a
military contract that was paid for using gold depressed prices, he said.
Fixings are conducted twice a day and orders can be revised throughout the
process as the price is moved higher and lower until participants are
satisfied. Some mining companies use the fix to price their sales.
Charles was also trading gold during the infamous
Brink’s- Mat gold robbery in 1983. An armed gang raided a Heathrow
warehouse operated by the security company and escaped with about 26 million
pounds ($42.2 million) in bullion, diamonds and travellers
checks.
Gold ETP Development
Charles was one of four people who were
“instrumental” in the development of the first gold-backed ETP
and “that idea changed the world of gold forever,” he said.
Interest soared in the decade since the products were introduced, with ETP
holdings at 2,385.6 metric tons yesterday, about 1 percent below the March 13
record, data compiled by Bloomberg show.
The gold now held in ETPs is valued at $127.6 billion,
according to data compiled by Bloomberg. HSBC Bank USA N.A. is the custodian
for the SPDR Gold Trust, the biggest gold ETP, storing the gold in its London
vault. There were 1,278.32 tons in the trust yesterday.
Gold has dropped the past three months and investor
holdings in gold ETPs declined in March and April.
“I do believe, however, that we’ll be
talking about record prices again before too long,” Charles said.
“Central banks are once again a force in the market. When this is
combined with private and institutional investment and access to markets
globally through over-the-counter, futures and ETP products, then it’s
easy to believe that any dip in the price of gold will be relatively short
lived. The rally isn’t over yet, in my opinion.”
Charles, who has two adult children, said he intends to
travel with his wife after retiring. “I’m going to try my hand at
doing something artistic for the first time in my life.”
For breaking news and commentary on financial markets
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NEWS
Gold May Climb for Sixth Day, Heading for Best Run
Since August - Business Week
Gold hits 2-week high as US data weighs on dollar
- Reuters
Krugman Says Fed ‘Reckless’ to Allow High
Jobless Rate - Bloomberg
A ‘Gold’ Finger Behind Bullion’s
Morning Tumble? – Wall Street Journal
COMMENTARY
Critical Factors That Will Impact Silver
– Financial Sense
Today's $1.24 Billion Targeted Gold Slam Down Makes
The Mainstream Press – Zero Hedge
Russia Today's 'Capital Account' interviews GATA's
Bill Murphy – You Tube
U.S. Debt Culture and the Dollar's Fate
– National Interest
Bloomberg TV: Paul V Krugman
- Bloomberg
Mark
O’Byrne
Goldcore
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