"The gold futures
markets opened in New York on Friday 12th April to a monumental 3.4 million
ounces (100 tonnes) of gold selling of the June futures contract in what proved
to be only an opening shot. The selling took gold to the technically very
important level of $1540 which was not only the low of 2012, it was also seen
by many as the level which confirmed the ongoing bull run which dates back to
2000. In many traders minds it stood as a formidable support level... the line
in the sand. (...)
The selling was timed
for optimal impact with New York at its most liquid, while key overseas gold
markets including London were open and able feel the impact. The estimated 400
tonne of gold futures selling in total equates to 15% of annual gold mine
production - too much for the market to readily absorb, especially with
sentiment weak following gold's non performance in the wake of Japanese QE, a
nuclear threat from North Korea and weakening US economic data. The assault to
the short side was essentially saying "you are long... and wrong"."
