Gold trading was temporarily halted on the CME for 10 seconds this morning at 8:42 AM ET for a "stop logic event," according to Bloomberg.

A big trade knocked $25 off the price of gold in a short, two-minute span, triggering the event.

Stop Logic detects potential market movements caused by the triggering and trading of Stop orders where the resulting price move would extend beyond an exchange specified threshold.

The triggering of Stop orders can potentially exaggerate price movements in temporarily illiquid markets. When triggered Stop orders attempt to move the market to an executing price beyond a pre-established value, a Stop Logic event occurs. Stop Logic detects these situations and responds by placing the identified market in a Reserved state for a predetermined period of time, usually 5 to 10 seconds, depending on the instrument. During the Reserve period, new orders are accepted and an Indicative Opening Price (IOP) is published, but trades do not occur until the Reserve period expires, thereby providing an opportunity for participants to respond to the demand for liquidity. At the end of the Reserve period, the instrument will re-open and matching will resume.

Stop Logic will not prevent markets from ultimately moving in the direction of the order flow, but allows time for liquidity to enter the market so that new orders can be matched against the triggered stop order(s).

The chart below shows the drop in gold, along with the big spike in volume at 8:42 AM on the sub-graph.

Miller Tabak chief technical market analyst Jonathan Krinsky says technical patterns imply a move downward to $1110-1120 an ounce, 12% lower from current prices.