Amid quiet beginning of a trading week we’ve experienced an outstanding move in gold prices in early European trading. There was a $17 plunge just in a few seconds without any specific news behind such wild volatility. Since then, gold prices have tested once again daily lows and rebounded significantly when the US session has kicked off.

The most likely factor standing behind such amazing decline was so-called ’fat finger’ or a mistake in placing an order, a situation well-known for traders. When prices sunk volume shot up to 1.8 million ounces a level not reached even with the surprise election of U.S. President Donald Trump or Britain’s vote to leave the European Union.

Some argued that a trader may have made a larger order than intended, or underestimated the market’s ability to absorb so much gold. As a result, there were as much as 18,149 lots traded on Comex in just a minute, before falling back towards 2,334 lots an hour later.

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Gold prices tumbled more than $17 in less than a minute, volume soared at the same time to the level not seen even during US Presidential elections or Brexit referendum. Source: Bloomberg

According to David Govett, head of precious metals trading at Marex Spectron Group in London, that kind of moves are going to become more widespread with the way things are going. 

What does it actually mean for prices going forward? First and foremost, such kind of moves are usually short-lived, however this time prices have yet to get back their prior losses. It could raise concerns that there was something more than a ’fat finger’ behind the move. 

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 Gold prices tumbled following a likely erroneous order which possibly was placed, the outlook remains intact from the daily time frame though. Source: xStation5

Given the daily time frame there is quite an ominous candlestick, however the jury is still out to assume more durable declines. Prices have got a boost after disenchanted durable goods orders from the US economy. In order to assess an impact of today’s decline on price action it has to wait for the closing. 

Let us also recall our fundamental take with regard to gold prices which we published a week ago. From that standpoint we could expect gold prices to keep on going up. Nonetheless, that scenario could be questioned if prices managed to break through an upward trend line