Huge sell orders have gold bugged!

Mystery size gold seller

Some gold bear is making a statement by overwhelming the market with massive sell orders. Forget gold’s recent correlation with other markets, big money can knock gold out of that pattern. Yesterday as reported by Zero-Hedge gold plunged(COMEX:GCQ14) more than $20 as "Someone" dumped $1.37 billion in gold futures at the U.S. open on Monday. The massive order caught the market by surprise and gold got slammed trying to figure out what hit them. Sure the market was weak as Portugal’s bank problems seemed contained. No other markets were making a mover so this was really about one big order. 

Who put in the order and why was the question of the day. Was it a European central bank trying to raise money to bail out Portugal’s Banco Espirito Santo, which saw another sharp drop in its share price of 7.69% yesterday. Perhaps it was a bank that wants to be short in a big way or needs book profits or a send a message to resurgent buyers of gold and gold ETF’s that they are barking up the wrong tree.

Yet the massive sell orders did not stop there. As gold was recovering from the phantom sell order, out of the blue a massive order struck once again. Just as Fed Chairman Janet Yellen was speaking out of both sides of her mouth, as reported by Zero Hedge, gold went back below $1,300 as "someone" dumps $2.3 billion in futures at a time when volume was light and an order of that size would have the capacity to move the market.

As Zero Hedge put it “With The Fed proclaiming bubbles in some of the most-loved segments of the stock market and explaining that the economy is doing "ok" but they must remain dovish for longer for fear of "false dawns”, what better time than now to dump $2.3 Billion notional in futures. Of course the dump in gold's anti-status quo price coincided with an odd V-shaped recovery in stocks... Gold remains above its pre-June FOMC levels still.”

Of course smaller traders that can’t afford the 150 million dollars margin to throw around 17,000 lots are being forced away from the futures market into ETF’s or back into stocks that many feel is overdue for a correction. Gold will try to recover until the next 17,000 or 20,000 lot market order comes in. 

 

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


Comments
comments powered by Disqus