Gold Falls Over 12% In Biggest Plunge in Decades as Gamma Squeeze Hits Options Market

Gold suffered its steepest drop in decades on Friday, as a combination of broader market selling and complex options trading intensified the decline. The SPDR Gold Shares ETF (GLD) fell more than 12%, while silver experienced its largest intraday loss on record, sending shockwaves through the metals market.

Analysts say a “gamma squeeze” may be amplifying the selloff. This occurs when dealers holding short options adjust their positions by buying futures as prices rise and selling as they fall, creating accelerated swings. Aakash Doshi, global head of gold and metals strategy at State Street Investment Management, noted that “dealer hedges likely pushed prices higher initially, causing a parabolic spike, which is now unwinding.”

The drop coincided with key options expiries. Large SPDR Gold Shares ETF positions expired at $465 and $455, while Comex saw significant March and April options at $5,300, $5,200, and $5,100. Technical indicators suggest further weakness could persist, but Doshi added that the market still favors gold allocations in 2026, calling the decline a potential buying opportunity.

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Despite the steep selloff, bullish positioning in the options market actually increased. Investors piled into call options betting on a rebound, with SPDR Gold Shares options showing an inverted skew. On Comex, thousands of call spreads traded, indicating ongoing hedging and speculative activity.

The selloff also followed political and economic cues, including President Donald Trump’s announcement of Kevin Warsh as the next Federal Reserve chair, adding to market uncertainty.

Analysts say while volatility remains elevated, long-term structural factors continue to support gold, keeping it attractive for institutional and retail investors seeking safe-haven assets.

Key Highlights:

• Gold fell over 12%, silver hit record intraday loss

• Gamma squeeze and dealer hedges amplified the decline

• SPDR Gold Shares ETF and Comex options expiries contributed to volatility

• Options market still shows bullish bets despite selloff

• Trump’s Fed nomination added to market uncertainty

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