Khaberni - The gold and silver markets experienced a sharp and sudden decline, erasing more than $7.4 trillion from their value in just a few minutes, shocking investors and traders around the world.
The prices collapsed sharply after reaching record levels during the past weeks, sparking widespread debate about the reasons for this sudden drop, and whether it was a natural result of market fluctuations and profit-taking, or it constitutes a case of deliberate manipulation.
Record collapse in precious metals markets
Gold prices recorded a drop of over 9%, while silver prices fell more than 32% in a short period. Investors faced rapid losses, while social media users pointed out the extent of the losses, confirming that the erased amount approximates the total market value of digital currencies. The total market value that evaporated from the gold and silver markets as a result of this collapse is estimated at about $7.4 trillion, according to The chosun daily.
Some described this event as "one of the largest liquidity fluctuations in history," while analysts attributed the sharp drop to profit-taking after prices reached record levels, speculative trading practices, and global uncertainty.
Was there manipulation?
A number of investors and analysts wondered whether the sudden drop in gold and silver prices was the result of complete market manipulation. Experts indicated that such rapid fluctuations could result from profit-taking, speculative trading, or coordinated actions by major investors.
They explained that smaller markets like silver, platinum, and palladium are more susceptible to sharp fluctuations due to sudden cash inflows, compared to larger markets like gold or the S&P 500. Despite no official confirmation of manipulation, the magnitude of the losses raised questions about the fairness and stability of the market, and its need for regulatory review.
Profit-taking after record levels
Kathleen Brooks from XTB Trading group said that the gold and silver rally ended because prices rose too quickly, according to a report published by "economictimes" and reviewed by "Al Arabiya Business".
David Meger, director of metals trading at High Ridge Futures, explained that the sales came after precious metal prices reached record levels, where investors took the opportunity to secure profits, although both metals still have the potential for their best month since the 1980s.
Increased demand and geopolitical tensions
Gold demand expanded to include cryptocurrency investors and central banks, according to Brian Lan, the executive director at GoldSilver Central, who said that investors are looking for higher returns in precious metals.
Geopolitical tensions added more uncertainty, especially with US President Donald Trump demanding Iran negotiate a nuclear deal, and Iran threatening to respond to the United States and its allies.
Digital currencies and gold funds
The CEO of Tether announced allocating 10%-15% of the company's investment portfolio to actual gold, while the SPDR Gold Trust, the largest gold-backed investment fund, recorded record levels of holdings not seen for nearly four years.
These movements indicate continued interest in gold despite the sharp price volatility.
The Federal Reserve and its impact on the markets
The U.S. Federal Reserve left interest rates unchanged, while investors anticipate the announcement of a new central bank president to replace Jerome Powell.
The markets expect possible rate cuts in the coming June, which in turn affects investment decisions in the gold and silver markets.
Sensitivity of smaller markets
Reports indicate that the markets for silver, platinum, and palladium are smaller compared to gold or the S&P 500, making them more susceptible to sudden fluctuations due to speculative flows.
Guy Wolf from "Marex" said that these metals "are prone to very rapid movements that may deviate from the actual demand for the metal".
The wiping out of trillions of dollars from the gold and silver market resulted from several reasons including profit-taking after record levels, speculative trading, and market reactions to geopolitical events and Federal Reserve decisions.
