Who would post a bid or ask of 650+ gold fut contracts? And why?

A

applejuice

I'm fortunate to have access to a Bloomberg terminal at work, meaning it's easy enough for me to trawl through intraday tick data.

Every once in a while I come across huge bids or offers in gold futures, that have fully traded, all at a single price level.

I can't fathom this size of order. The universe of market participants capable of posting such a large order is presumably very small.

Maybe a mining company or two, looking to hedge...
Maybe a large investment fund...
Maybe a central bank...

What especially interests me about these limit orders is that they represent a rare instance where I know for certain that at price X, an individual participant has opened (or closed) a trade.

My intuition is that these are more likely to be the closing of existing positions. I say that because from my own experience it is easier to be carefree (or careless) when you are closing a winning position.

Does anyone else find their curiosity piqued by huge limit orders that actually fully trade out?

What I wouldn't give to be able to discuss the motives of such trades with those who initiated them...
 
Are you looking at Spot or Futures?

Bloomberg may be using aggregated trade data. Please verify that with the vendor support(and share the info, if you wish).

It doesn't seem remotely possible unless you are seeing the leg of a time spread somewhere between April/Jun Future. But in any case, 650+ lots seem way out of line.

I am guessing 20 max using an execution algo.
 
CME Futures. I myself have spent cumulatively hundreds of hours staring at the Gold futures (GC) price ladder. These bids and offers are legit. But I've never understood the reasoning behind them.
 
I have had a few months of continuous watching of the ladder for the current month and never saw greater than 50 lots on each side, 5 levels deep.

Additionally, I have access cross order information but can't seem to find any.:banghead:
 
applejuice said:
I'm fortunate to have access to a Bloomberg terminal at work, meaning it's easy enough for me to trawl through intraday tick data.

Every once in a while I come across huge bids or offers in gold futures, that have fully traded, all at a single price level.

I can't fathom this size of order. The universe of market participants capable of posting such a large order is presumably very small.

Maybe a mining company or two, looking to hedge...
Maybe a large investment fund...
Maybe a central bank...
More...

Could this not simply be a case of many many small market participants having smaller orders, that are getting executed all at once? If 10 individuals each have an order in for 1 contract at same price, and all are filled by 5 other individuals on the other side of the book for 2 at same price, does that count as one single lot?

Wish I could see an actual electronic order book or ladder on a true terminal, and the executions as they occur, and from whom, to whom, what type of order etc. Would make things much easier.
 
If you think of gold as an FX currency rather than a metal, it opens up a different category of trading strategies.
 
xandman said:
I have had a few months of continuous watching of the ladder for the current month and never saw greater than 50 lots on each side, 5 levels deep.

Additionally, I have access cross order information but can't seem to find any.:banghead:
More...

I know you are an expert in gold.
I just wonder, just out of curiosity, do you see gold as metal or as currency ? I don't really see that perception will make any difference though.
 
Big lot sizes like that are often a magnet for price to come and test it. It's rare but 10x plus liquidity happens from time to time.
 
victorycountry said:
I know you are an expert in gold.
I just wonder, just out of curiosity, do you see gold as metal or as currency ? I don't really see that perception will make any difference though.
More...

I am not an expert by any stretch of the word. However, I know of the history of gold and the expected death of fiat currencies. Who doesn't?

I am not a fan of jewelry. So, I guess I am biased to looking at it as a currency. A bulky cumbersome currency with irregular convertibility in a time of need.

It is the six sigma event currency. Being competitive, I want the SEVEN sigma currencies: guns, bullets, canned food and water. I have witnessed an emerging economy currency crisis and witnessed people hoarding US dollars even without having immediate convertibility to purchase household goods. Family jewelry is liquidated first.

As for the eventual death of all currencies: If Britain was smart enough to bow out gracefully with the Sterling, why wouldn't the US be just as benevolent to give way to the next country/currency if they want the burden?
 
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