Big Sell-Off In Gold Due To Major Stops Triggered

Gold futures are tumbling amid concerns about dysfunction in Washington and the government shutdown, while stocks and bonds seem to be largely ignoring it.

The dollar also fell, touching an eight-month low as buyers moved into euros and other currencies. Stocks were higher and bond prices were lower, with Treasury yields edging slightly higher.

Gold futures fell sharply after at least one major seller triggered a decline that drove the metal through key technical levels on huge volume, analysts said. The December gold futures contract was down about 2.6 percent, to $1,292 per troy ounce in late morning trading. Silver also skidded, losing more than 4 percent.

“We heard there was one big seller,” said Howard Wen, precious metals strategist at HSBC. Wen said the selling sent early morning gold futures volume to 130,000 contracts by about 10 a.m. EDT, nearly equal to a whole day’s volume.

“Around 8:40 [a.m.] when the bottom really came out of the metal, a billion dollars worth traded in the futures pit over a 10-minute period. I think a fair amount of it was stop losses when it took out the September low, and once it hit $1,300, it took out more,” said Dave Lutz, head of ETF trading and strategy at Stifel Nicolaus.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu