Gold Spikes to $1,467 Before Crashing back to $1,200

Algos gone wild?

Bullion.Directory precious metals analysis 26 November, 2014
By Christopher Lemieux
Senior FX and Commodities Analyst at FX Analytics

In spectacular fashion, gold futures spike to $1,467 per toz. prior to the Asian market before quickly falling back to $1,200. Warren Buffet and the CNBC crew must have felt their hearts flutter.

The circumstance surrounding the quick squeeze higher is unknown and likely to be algorithms at work prior to the thin liquidity during the Asian trading session, where large gold movements have occurred this month.

Many traders or investors using retail brokerages probably did not notice the spike unless they were tied directly into the liquidity pools. While trading high beta equities for a Chicago firm, I noticed these price movements happened frequently where Tesla (TSLA) or Amazon (AMZN) would spike $3 dollars in the matter of a micro-second only to drop off suddenly.

Here is the spike on a chart provided by barchart.com :

As reported by ZeroHedge, the move was likely do to a liquidity testing algo or a bad feed. Either way, it kept pushing the price through $1,350 and, subsequently, $1,467 before falling back just before the market re-opened for trading.

Clearly, there is liquidity for the gold train to head back north.

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