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Why Did Gold Crash In April 2013?

Gold’s 13 percent crash in April 2013, representing a sudden and steep decline of $200 per ounce over two momentous days, set the floor for gold’s poor performance in 2013, which saw its worst showing since 1981.

The cause of the abrupt decline, dubbed a “flash crash” by some, has been much debated. Analysts have cited weak buying of gold over China’s Lunar New Year, unsettling talk of Cyprus central bank gold sales, and highly visible mass sales from exchange-traded funds (ETFs). Others blame a bearish Goldman Sachs Group Inc. (NYSE:GS) call on gold in April.

Some gold bugs have even accused banks of manipulating the plunge artificially for profit, though they’ve offered little credible evidence.

But CPM Group commodities analyst Jeffrey Christian offered a simple explanation at a recent gold gathering in New York.

“If you go back to April 12, when the gold price started to fall sharply, it was more than 1,000 entities trading in a 10-minute period,” said Christian. “What you’re seeing is the effects of high-volume computerized trading.”

Source International Business Times


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