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Here's What Was Behind Friday’s Gold Sell-Off

ByTommy Humphreys
Published 10/13/2013, 12:13 AM
Updated 07/09/2023, 06:31 AM

Futures are a zero-sum game in the sense that on the contract settlement date all the longs and shorts must net out, with the contracts either being cash settled or the longs taking physical delivery of the commodity in return for providing cash to the sellers.

However, during the time that a given futures contract is actively being traded there are very clear winners and losers in this zero-sum game. This is why market participants spend so much time and energy figuring out how other market participants are positioned, and more importantly what might motivate them to change their positioning in the future.

It is not conspiratorial at all to think that various market participants are using numerous and varied tactics in order to gain an advantage over other market participants. After all, this is the market wherein the #1 and overriding objective of all participants is PROFIT (even hedgers are utilizing futures contracts to lock in PROFITS).

In the 2013 market environment there are many new tricks ranging from millisecond trade execution to special order routing and dark pools. However, one of the oldest tricks in the book is stop running; this is a strategy of pushing price to levels which will trigger a large number of stop-loss orders then using this newly created liquidity to profitably exit one’s positions.

Friday morning’s stop tripping 5,000 contract market sell order in December gold futures was not part of any grand conspiracy to lower the price of gold. It was simply a trading tactic intended to have maximum market impact and wreak havoc at a key prize zone, which it did quite successfully!

Original post

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Latest comments

Gold has been following sell trend technical's now for over 1 year.. Just trade the trend until it ends.. No reason to fight it.. It is like every candle up is like a bull trend when in reality it is just retracements to sell..
I agree with you 100 percent
Gold has been following sell trend technical's now for over 1 year.. Just trade the trend until it ends.. No reason to fight it.. It is like every candle up is like a bull trend when in reality it is just retracements to sell..
You need to stop writing gold articles, you have been wrong all along with your bullishness and we just need to go back and read your previous articles to prove it. Wrong every time. Please write on something you know more about because gold is something you absolutely don't have a clue about.
Agree completely....at what point do you admit you have completely misread the market Tommy.....I can only hope you are not putting your money where your mouth is.. If you are going to continue banging the "gold is about to bottom" drum month after month, atleast address the inaccuracy of your previous posts.. Have you heard of the saying...."It is better to remain silent and be thought a fool than to open one's mouth and remove all doubt". . I have no problem with someone putting an opinion and being wrong...we are all wrong probably most of the time, but to survive you have to know when to cut your losses. Which is why I presume you are not backing up your opinion with cold hard cash, even King Midas, the ultimate long side gold player, would have run out of money by now!!. .
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