... and on Tuesday morning the divergence that was barely noticeable late Monday has blown out to unprecedented level, with gold futures decoupling and trading far above spot prices.
The near record spread is the widest seen in four years.
As Kitko notes, just before noon EDT, one price vendor was showing spot metal was trading at $1,612.10 an ounce while at the same time showing the Comex April futures were at $1,654.10 an ounce – a spread of $42 an ounce. It was much wider earlier in the day, when as Kitco adds, "nearby futures were more expensive than deferred, a sign of strong demand in any commodity market."
"I’ve never seen that before," said one gold trader who has been in the market for 30-plus years. Some contacts reached by Kitco suggested the discrepancy is an evolving story that is still unfolding, with traders trying to figure out what’s happening.
Earlier in the day, the London Bullion Market Association, the world's most important authority for physical gold and its transfers, issued this stunning statement to Kitco:
"The London gold market continues to be open for business. There has, however, been some impact on liquidity arising from price volatility in Comex 100-oz [ounce] futures contracts. LBMA has offered its support to CME Group to facilitate physical delivery in New York and is working closely with Comex and other key stakeholders to ensure the efficient running of the global gold market."
In short, the unprecedented scramble for physical metal coupled with continued liquidations among levered players, while refiners remains offline, appears to be fracturing the gold market from within.
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