The precious metals markets witnessed a violent and unprecedented price earthquake, as gold prices recorded a sharp and sudden decline since dawn on Thursday, incurring heavy losses in a short period of time, which raised a state of anxiety and anticipation among investors and traders around the world.
Details of the major price collapse
In a dramatic turn of events, the price of gold soared to a record high of $5,597.04 equivalent to a staggering 674,443 Saudi riyals per kilogram. However, this peak proved short-lived, as the precious metal faced a sharp and intense sell-off.
According to trading data, prices continued their freefall, plummeting by a staggering 21.37% , eventually settling at $4,401.05 per ounce, equivalent to 530,327 riyals per kilogram. This price difference translates to a loss of 144,117 riyals per kilogram of gold, marking one of the most severe downward corrections the market has witnessed.
Context of fluctuations in global markets
These sharp movements come amid a global economic climate of uncertainty, where gold prices are typically influenced by a complex interplay of factors, including central bank interest rate decisions, the strength of the US dollar, and geopolitical tensions. While gold is traditionally considered a safe haven for investors during times of crisis, the recent sharp volatility—exceeding 20% in just a few hours—reflects a state of extreme volatility and widespread portfolio liquidation.
Economic impacts and potential risks
This sharp decline carries significant economic implications, indicating fundamental shifts in the risk appetite of major investors and investment funds. Locally, this downturn directly impacts the jewelry and bullion market in Saudi Arabia, where some may see this drop as an opportunity to buy at lower prices, while short-term gold holders could incur substantial paper losses.
Tips for market participants
These extreme price movements highlight the importance of extreme caution and close monitoring of gold prices, especially given their rapid fluctuations. Financial experts consistently warn of the high risks associated with short-term speculation in such circumstances, recommending portfolio diversification and avoiding being swayed by immediate market movements without a thorough analysis of economic data.
