Was Gold the Victim of a Hit and Run?

Does the heavy sell-off change the picture for gold, or is the metal still worth holding?

When it comes to the bull market in gold, occasional volatility is part of the deal. You can’t reach a long-term destination without price declines… sometimes big ones.

But on the morning of Monday, Sept. 26, something fishy happened. The price of gold dropped a stunning $130 per ounce during Asian trading hours, before the U.S markets opened.

The yellow metal recovered from that blow, leaving a nasty spike on the overnight charts. But many wondered what such a huge move was all about.

“The break has provoked a great deal of suspicion,” says Peter Brimelow of MarketWatch. In other words: Could gold have been the victim of a hit and run?

Via Brimelow, U.K. gold dealer Ross Norman adds:

Placing such a huge order into the market when the least number of market participants were active tells you that they were out for dramatic effect. Anyone looking to offload significant amounts of metal at the best possible price would have done so when both London and New York were both [open]. … Clearly finessing gold into the market was not their motive — they wanted a statement.

Nomura, a Japanese investment bank, put out a research note explaining the connection between Asian trading hours and the price of gold. In recent weeks, Nomura says, “price action during Asian hours has become very bearish, which had not been the case in previous unwinds earlier in the year.”

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via Was Gold the Victim of a Hit and Run? | articles.

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