Lately, the reason the gold market has been fluctuating seems to be more than just simple price adjustments; it appears to be exacerbated by gamma squeezes. According to institutional analyses, when option positions are concentrated at certain price levels, the price breaking through that level triggers a chain reaction.

Specifically, what happens is that traders holding short options try to rebalance their portfolios by buying additional futures or gold ETFs, and when the price drops again, they sell off those positions. For example, the SPDR Gold ETF had options clustered around specific strike prices, and CME gold futures options were also concentrated around several psychological resistance levels.

Ultimately, as a gamma squeeze occurs, the rapid decline driven by technical factors accelerates, rather than normal price movements. If you trade without understanding this phenomenon, your losses could increase significantly, so always keep an eye on option expirations and major strike prices.