On May 20th, ATFX reported that at 21:05 Beijing time yesterday, the Shanghai Gold 2606 contract opened at 996.18, hit a low of 830.52, and closed at 994.8. The intraday maximum decline was 156.66 yuan, with the minute-level K-line chart showing a "single needle bottoming" pattern.
The mainstream view suggests that this unusual K-line is actually a "fat finger" event, typically caused by errors in algorithmic trading or large order misoperations. However, from a position perspective, even if it is a fat finger incident, the rapid price drop could force some traders to stop losses or even face liquidation.
The chart above shows the tick-by-tick transaction chart for the Shanghai Gold 2606 contract at 21:05 yesterday. Within 60 seconds, no transaction at 830.52 was observed. In fact, all quotes during that minute fluctuated between 994 and 996 yuan, with no abnormal volatility.
The presence of a low quote of 830.52 on the K-line chart without a corresponding transaction record suggests that the 830.52 quote may not be the widely assumed "fat finger event." It is more likely a system quotation glitch. A plausible explanation is that at 21:05 yesterday, the buying interest for the Shanghai Gold 20206 contract was extremely weak, and there may have been a brief moment with no buy orders. The quotation system, unable to retrieve any buy orders, defaulted to the limit-down price or the nearest buy order at 830.52 as the latest bid. If this speculation holds true, such a quotation glitch is expected not to impact actual positions.
Regarding international gold quotes, at 21:05 Beijing time yesterday, the one-minute K-line showed minor fluctuations around the opening price of $4,523, forming a small doji pattern. Prior to 21:05, gold's minute-level chart displayed three consecutive bearish K-lines, indicating a short-term bearish trend. In the 30 minutes following 21:05, gold prices continued to decline, reaching a temporary low of $4,464 at 21:31.
The noticeable short-term decline in international gold around 21:05 likely contributed to the thin buy orders for the Shanghai Gold 2606 contract.
The chart above illustrates the change in the 10-year U.S. Treasury yield over the past week, showing a significant and continuous upward trend. As a non-yielding asset, gold's holding value diminishes sharply when U.S. Treasury yields rise. Currently, international capital favors assets such as the U.S. dollar, U.S. Treasuries, and U.S. stocks, with insufficient motivation to allocate to gold. This may be one reason why the Shanghai Gold 2606 contract tested lower levels rather than higher ones.
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