Precious metals investors once again are left to wonder why gold is going down today as the metal hits its fourth consecutive day of declines.
In trading Thursday, gold for December delivery finished the session down $33.20, off 2.4%, to $1,333.60 per ounce. Gold prices on Thursday fell more than $30 in a matter of seconds.
The carnage continued today (Friday). Gold slipped to a five-week low on Friday, off roughly $72 an ounce over the week, marking the yellow metal's worst week since June.
The reasons why gold is going down today are partly related to some trading drama that occurred with gold yesterday…
The December contract, the most actively traded gold contract, quickly plunged to a four-week low, tumbling from roughly $1,350 to $1,344.50 in about one minute. Behind the drop was a large sell order in gold futures contracts that tripped a circuit breaker and shut down electronic trading for 20 seconds.
The sizable sell order for about 2,000 December gold futures contracts came in at 2:54:05, real-time data service company Nanex reported. The order was so huge that trading on Globex, touted as the fastest global electronic trading system and owned by exchange operator CME Group, came to an abrupt stop.
"This is the longest halt we have recorded in a widely traded futures contract," read a statement on Nanex website. The company said data shows the halt was likely "from one large order to sell at the market."
Trading halts are implemented to prevent excessive price volatility and typically last just a few seconds. The Chicago Mercantile Exchange (CME) Stop Logic circuit breaker is designed to stop trading for between 5 and 20 seconds. While halts really aren't that rare, Thursday's was exceptional for its duration and the underlying order's size.
Nanex spokesperson Eric Hunsader said in a statement the large order "came completely out of the blue," and that "there was very little other activity around that time." Hunsader added the halt was the "longest I've seen for major commodity future." The norm, he explained, is around five seconds.
The December gold contract dropped $10 in a split second on 2,200 contracts on Friday, but no halt followed.