Whoops! A Fat Finger Order Sends Gold Plunging

The price of gold fell to a multiweek low on Monday after a trader made a grave mistake.

Spot gold fell around 1 percent Monday morning to trade as low as $1,236.46, which marks the lowest level the commodity has seen since May 17, Bloomberg reported. U.S. gold futures also lost nearly 1 percent to trade at $1,245.40 an ounce.

The decline in gold is attributed to a large market order of 18,500 lots of gold, which represents 1.85 million ounces. This was likely a mistake, or a "fat finger" trade, as the order is bigger than anything seen at the peak of domestic political turmoil and the surprising outcome from the Brexit vote.

The trader or institution who placed likely "pressed the wrong button," David Govett, head of precious metals trading at Marex Spectron Group, told Bloomberg. Or perhaps the sell order was made as intended under the assumption that the market could absorb the large order.

Either way a mistake was made, and the price of gold hasn't fully recovered, which shows that flash crashes can occur in any tradeable market — not just stocks. Last year, the British pound suffered a flash crash and plummeted 6 percent in one minute on no news.

Here is a look at how gold and gold related exchange-traded funds are performing on Monday:

• Direxion Shares Exchange Traded Fund Trust JNUG down 3.50 percent at $19.30.
• Direxion Shares Exchange Traded Fund Trust NUGT down 2.82 percent at $32.65.
• SPDR Gold Trust (ETF) GLD down 1.19 percent at $118.24.
• Market Vectors Gold Miners ETF GDX down 0.84 percent at $22.55.
• Direxion Shares Exchange Traded Fund Trust JDST up 3.33 percent at $62.00.

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