Gold Recovers After Surprise Drop, Ends Slightly Lower

by Christopher Freeburn | January 6, 2014 4:37 pm

Gold Silver GLD IAU SLV[1]After rising modestly early in the session, gold futures plunged sharply on Monday. However, the metal recovered and closed with a fractional loss for the day.

The dramatic dive — during which the most active contract dropped by $30 — came shortly after the release of U.S. factory order and Institute for Supply Management (ISM) service index data. Trading was halted for 10 seconds due to the sudden drop, which may have been the result of a trader incorrectly entering order data into the system, often called a “fat finger” error.

Though the Commerce Department said that orders to U.S. factories grew in November, the ISM service index fell to a reading of 53 in December, down from 53.9 in November. That disappointed economists who had expected the ISM index to rise to a reading of 55 last month. The U.S. dollar moved lower on the news.

Gold futures for February delivery lost 60 cents, falling to $1,238 per ounce on Monday, according to CME Group[2]. Gold traded as high as $1,247.70 and as low as $1,212.60. Bullion closed in London at $1,239, according to BullionVault[3].

Silver futures for March delivery sank 0.5%, to $20.10 per ounce. Monday’s high for silver was $20.36, while the low was $19.95.

Metal funds moved slightly higher on Monday.

Mining ETFs were mixed during the day.

Gold stocks mostly improved on Monday.

Silver mining shares mostly advanced during the day.

As of this writing, Christopher Freeburn did not hold a position in any of the aforementioned securities. Adrian Ash of BullionVault[23] contributed to this report.

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