Precious metals markets experienced extreme volatility and sharp fluctuations yesterday (Thursday), with a detailed analysis by the Okaz newspaper revealing dramatic shifts in gold prices that resulted in significant losses for investors within a few hours. These sudden declines followed a strong and record-breaking rally that lasted for several days, presenting market participants with a real test of their risk management skills.
Details of the price collapse over 9 hours
According to the data, trading began at 6:24 AM with a significant increase, as the price of an ounce of gold reached $5,595.4, equivalent to 674,581 Saudi Riyals per kilogram. However, this stability was short-lived, as by 3:38 PM that same day, the price had suddenly plummeted to $5,104.3 per ounce.
This sharp decline led to a drop in the value of a kilogram to 615,408 riyals, which means that an investor who bought a kilogram of gold in the morning and was forced to sell in the evening incurred a real loss of 59,173 riyals, which is equivalent to a capital erosion of 8.77% during a period of time that did not exceed 9 hours and 14 minutes.
Previous upward context and profit-taking
This decline was not a mere coincidence, but rather a sharp corrective reaction following a series of consecutive gains. The yellow metal had continued its marathon climb for eight consecutive sessions prior to this day, adding nearly $1,000 to the price per ounce. Historically, strong upward waves are often followed by widespread profit-taking by investment funds and large speculators, leading to sudden selling pressure that sends prices plummeting. This explains the market's extreme sensitivity to momentary fluctuations.
Gold as a safe haven and short-term risks
Although gold is historically and globally recognized as a "safe haven" that investors turn to during periods of inflation and geopolitical turmoil to preserve currency value, yesterday's events highlight another side to the precious metal related to short-term speculation. This volatility demonstrates that gold, despite its long-term stability, can be high-risk for day traders who do not employ precise hedging strategies.
Economic impact and the importance of follow-up
These movements are particularly significant in local and Gulf markets, where gold is a fundamental part of savings and investment culture. These sharp price fluctuations underscore the need to closely monitor global markets and avoid being swept along by upward trends without technical analysis, especially for small investors who may not be able to withstand substantial losses in short periods.
