Today, global financial markets witnessed a resounding economic earthquake in the precious metals sector, as gold prices were subjected to a violent selling wave that plunged them towards recording their biggest daily drop in more than four decades, specifically since 1983. This wave was not limited to the yellow metal alone, but extended to include silver, which faced a catastrophic day by all standards, heading towards recording its worst daily performance ever, which sparked panic among investors and traders.
Details of the gold price collapse
According to current trading data, gold in spot trading plummeted by a staggering 9.5%, dropping to $4,883.62 per ounce. This sharp and unexpected decline comes after the precious metal soared to a record high of $5,594.82 last Thursday, indicating a significant correction and widespread profit-taking. Meanwhile, US gold futures for February delivery fell by 11.4%, settling at $4,745.10, reflecting a short-term bearish outlook in the futures markets.
Historic losses for silver and other metals
As for other metals, the picture was even more dire for silver, which lost its luster dramatically. The spot price of silver plummeted by approximately 27.7%, reaching $83.99 per ounce, after having earlier hit $77.72, nearly losing a third of its value in a single session – a decline of almost 30%. Platinum also suffered losses, falling 19.18% to $2,125 per ounce, while palladium dropped 15.7% to $1,681.
Historical context and economic importance
This sharp decline is reminiscent of the major market volatility of the early 1980s, particularly in 1983, a period marked by fundamental shifts in global monetary policies and inflation rates. Such a significant drop in gold prices in a single day is an extremely rare event, given gold's status as a "safe haven" to which investors typically turn during times of crisis. Experts suggest that such drastic movements are often the result of a combination of forced liquidation to cover short positions in other assets, or a sudden shift in market sentiment regarding the strength of the US dollar and interest rates.
This collapse is expected to have wide-ranging repercussions on local and global markets, as it may lead to a revaluation of major investment portfolios, directly affect the cost of raw materials in industries that rely on silver and platinum, as well as its psychological impact on small investors who consider gold a store of value.
