Velocity limiting in a control loop can cause a limit cycle if the the lag normally associated with the limiting element is one of the shorter lags in the loop. Going to manual and then back to automatic will normally stop the cycle, until some upset occurs that will cause velocity limiting again.
For more information on this subject and others, you may refer to a booklet "Controller Tuning and Control Loop Performance, a Primer" , which is available in the US for $17, postpaid if prepaid by check or money order. It has sold 30,024 copies to date. Control Engineering Magazine has referred to it as "PID Without the Math". Companion software is available for $11.
Information may be found at
David W. St. Clair Straight-Line Control Co., Inc.