Comex Halts Gold Trading After Metal Loses $12 In 2 Minutes

Michael Teague  |

It is no secret that 2013 has been a rough year for gold. The combination of Federal Stimulus and now looming “taper” of that stimulus, as well as the Cypriot banking crisis, India’s harsh measures to curb imports of the yellow metal, and a number of other factors have seen gold almost 20 percent lower year-to-date.

Despite a brief rally in recent weeks, the situation does not appear as though it will improve any time soon. After regaining some $200 that it had lost throughout the first half of 2013, contracts for December plummeted nearly $12 per ounce in a period of about two minutes on the CME Group’s Comex in the early hours of Thursday morning, triggering an automatic halt in trading that lasted for some 20 seconds.

The “Stop-Logic halt” is a common feature of trading systems throughout the world and across all markets as a bulwark against drastic sudden price fluctuations, and it is not necessarily surprising if it happens several times throughout the course of a day. Still, speaking to Bloomberg this morning, a spokesman for the Comex exchange was not forthcoming about the details of the trade that triggered the actual halt.

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Back in May, the CME said that its Stop Logic halt was designed to give enough time for traders to provide liquidity in order for price stability to be re-established.

As immediate fears of an attack on Syria seem to drift further and further into the distance against the backdrop of unexpectedly positive economic data, with all and sundry expecting the Federal Reserve to decrease its bond and asset purchases by at least $10 billion sometime this month, the rally in gold is now in its own process of tapering. Investors have spent a great deal of the year being weaned from the age-old notion of the metal as a safe haven as the price continues to drop.

Gold stocks also fared terribly as a result, with Barrick (ABX) down 4.4 percent to $17.81, Goldcorp (GG) down 5.7 percent to $26.20, and Newmont Mining (NEM) down 3.4 percent to $28.46.


[Image Courtesy of Flickr Creative Commons]

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