Puzzling early-morning gold jump simmers; gold up 3% for the week

After a puzzling 3% jump within just 10 minutes early Friday morning, the spot gold price simmered down to $1,315 by late afternoon.

Following Thursday's movement, gold is sitting in a good place for the end of the week. The precious metal was hit hard on Tuesday – a three month low of $1,253 – but managed to regain those losses on expectations that the US government will extend its monetary stimulus program.

Spot gold rose by 3% in early trading hours but lost those gains throughout the day. High trading volumes in the morning puzzled analysts as a "wave of buy orders worth over $2.3 billion surged into the market," a Reuters article shows.

These unexplained "trade surges" have become increasingly common over the past few weeks.

Gold price, week ending Oct 18

Friday's eventual decline is partly due to data showing decreased holdings in gold-backed ETFs.

"It remains to be seen whether the investor community will now restart their buying of various ETF's given that the Fed's tapering intentions are now merely being postponed," a metals analyst at brokerage INTL FCStone told Reuters.

Meanwhile, a Chinese credit rating agency downgraded US sovereign debt by one notch to A- – a move which helped drag down the dollar to an eight-month low versus the euro and a currency basket.