Gold Flash Crash Caused By HFT Algorithm, Not Fat Finger

The recent flash crash in the gold market, first reported by ValueWalk on January 6, is now being attributed to an intentional high frequency trading (HFT) algorithm and not a “fat finger” mistake, according to Eric Hunsader, founder of market software firm Nanex LLC.  In this flash event the price of gold dropped over $30 in one second, a rare move indeed given the history of the gold market.  Hunsader estimates the value of the trades in question at $500 million. Mr. Hunsader’s key insight is the fact that the trading algorithm paused during the $30 move and then continued…