In the early hours of the New York morning on Thursday, when scarcely a few hundred lots of gold futures are usually traded, a wave of buy orders worth over $2.3 billion surged into the market.
Prices soared 3 percent in just 10 minutes, setting the tone for the next 12 hours of trade and puzzling many traders and investors who have been rattled by a series of similarly abrupt, and largely unexplained, trade surges over the past two weeks.
While sudden swings in the price of gold are nothing new, the usual causes - a shock in economic data or a "fat finger" erroneous trade - don't seem to fit. While the U.S. dollar had also tumbled on Thursday, bullion's move was far more extreme.
Some are pointing at spin offs from today's predominantly 24-hour electronic trading, with a far smaller number of market makers on the trading floor to match orders and provide liquidity.
The half-dozen mammoth orders whipsawed prices and disrupted trade in the CME Group's Comex futures, a market already edgy about bullion's fading safe-haven appeal and its lackluster performance during the U.S. budget impasse.
"What's unusual about these moves is the price stays at a new level so that suggests it's a natural buyer or seller," Chris Concannon, executive VP of New York-based electronic trader Virtu Financial.
"This is moving to and setting a new price level, so it can only be done by someone who's buying or selling substantial amounts and then holding."
Unlike the meteoric declines in April and June, when institutional investors exited en masse in a two-day sell-off, these seemingly sporadic trades lasted only minutes but overwhelmed volumes and price direction on each occasion.
The barrages started on the first day of the U.S. government shutdown, yet seemed to bear no link to the headlines from Washington. Other financial markets have remained mostly immune to gold's erratic trades.
Traders have offered a host of possible explanations including that it could be driven by selling by a distressed fund, yet the incidents have occurred across a period of nearly three weeks.
Others said it may be due to unusually low liquidity, as open interest dwindled to a four-year lows just a day before the first episode on Oct. 1. But professional Comex traders should know to moderate their orders in thinner conditions.
A few suggested darker causes: the deliberate gaming of the market, whether by a rogue trader or a computer-driven algorithm that