Jan. 6 (Bloomberg) -- Gold rebounded after a plunge triggered a trading halt in New York, while slowing growth for U.S. services increased demand for an alternative asset.
On the Comex, gold futures for February delivery fell as much as 2.1 percent in trading of more than 8,000 contracts, each for 100 ounces. CME Group Inc, which owns the exchange, halted trading for 10 seconds at 10:14 a.m. as prices dropped more than $30 an ounce in about a minute. That triggered a “velocity logic event,” Chris Grams, a CME spokesman, said in an e-mail. Prices settled little changed at $1,238 at 1:40 p.m.
“These kinds of price movements are becoming very common, and it seems some players are putting in very large orders to trigger this kind of slump,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “The exchange needs to look into these kind of spikes.”
All business during today’s event stands, Grams said. On Dec. 26, the Chicago-based CME changed some Comex copper deals following a trading error. On Dec. 31, gold fell about $13 in a minute in trading of almost 5,000 contracts to a six-month low. Later during the session, the price jumped about $24 in a short span.
Gold gained 2 percent last week on increasing demand for bars and coins.
The premium for immediate delivery in China was about $22.35 an ounce today, compared with last month’s average of $15.35. A services-industry gauge in the nation decreased to 50.9 in December from 52.5 in the previous month, according to HSBC Holdings Plc and Markit Economics Ltd. today.
The Institute for Supply Management, based in Tempe, Arizona, said today that its U.S. non-manufacturing index decreased to a six-month low of 53 in December from 53.9 in November.
“Physical buying has remained robust in Asia,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Also, there is some safe-haven buying because of growth concerns.”
In 2013, gold tumbled 28 percent, the most since 1981. Some investors lost faith in the metal as a store of value amid a U.S. equity rally to a record and muted inflation. The Federal Reserve on Dec. 18 said it would reduce its monthly U.S. bond purchases to $75 billion from $85 billion.
Holdings in exchange-traded products backed by gold fell 3.3 metric tons on Jan. 3 to 1,755.6 tons, the lowest since October 2009, data compiled by Bloomberg show.
Silver futures for March delivery fell 0.5 percent to $20.103 an ounce on the Comex. Earlier, the price dropped as much as 1.3 percent as gold tumbled.
On the New York Mercantile Exchange, platinum futures for April delivery rose 0.2 percent to $1,416.40 an ounce. The price climbed for the fourth straight session, the longest rally since Oct. 22, and the metal reached $1,423.80, the highest since Nov. 19.
Palladium futures for March delivery rose 1 percent to $738.50 on the Nymex. The price gained for fourth straight session, the longest rally since Nov. 6.
--With assistance from Nicholas Larkin in London and Glenys Sim in Singapore. Editor: Patrick McKiernan