Gold prices experienced a significant decline, dropping 9% last Friday, marking one of the most extreme single-day moves in years. The sell-off was attributed to forced liquidations and momentum unwinding, reflecting rapid de-risking by systematic traders. Despite this volatility, gold remains up 13.3% year-to-date, note Charlie Lay and Moses Lim from Commerzbank.
Market volatility impacts Gold prices
“Gold and silver collapsed by 9% and 26% respectively last Friday. Silver in particular was down nearly 40% from its recent high to its intraday low last Friday, marking one of the most extreme single-day moves in years.”
“The speed and scale of the sell-off reflected forced liquidations and momentum unwinding. The pattern had the hallmarks of rapid de-risking by systematic and model-driven traders i.e. market participants using rules-based algorithms that can accelerate moves once key technical or risk thresholds are triggered, amplifying moves on the way up and down.”
