Fat Finger?: Gold ETF Slides as Bullion Holdings Set New Record

November 28th at 9:59am by John Spence

SPDR Gold Shares (NYSEArca: GLD) was down nearly 2% in Wednesday morning trade, reflecting a sharp premarket drop in gold futures along with speculation of a “fat finger” trade. Some traders said the decline could also be related to U.S. fiscal cliff negotiations and Greek debt.

Gold futures jolted lower Wednesday morning amid talk of a fat finger trade at a large U.S. bank.

“Market talk that a large U.S. bank was attempting to roll over their December contracts, which expire at the end of Wednesday’s trading session, and instead outright sold them when floor trading opened was also cited as a potential reason for the collapse,” Forexpros.com reported.

“Gold headed for the biggest drop in more than three weeks on speculation that improving U.S. economic data will curb demand for the metal as a protection of wealth,” Bloomberg News reported Wednesday.

On Tuesday, the Conference Board said its consumer confidence index rose to the highest level since 2008.

Gold ETFs were in the red Wednesday after bullion holdings in metal-backed exchange traded products climbed to a fresh record of about 2,612 metric tons.

Gold prices fell for a third day as the euphoria over a Greek debt deal fizzled, Reuters reports. “The threat of the U.S. economy slipping off the fiscal cliff may keep gold prices supported, but the strength in the dollar – a more popular safe haven – is likely to put a cap on gains,” it said.

Gold holdings in GLD, the largest precious metal ETF, rose to a record high of nearly 1,346 tons, according to the report.

The gold fund has encountered resistance at its 50-day simple moving average.

SPDR Gold Shares

Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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