TradingKey - As of 15:25 Beijing time, spot gold ( XAUUSD) plummeted more than 8% intraday to $4,118 per ounce; COMEX gold futures tanked 10%, marking a rare single-day drop in recent years.

Since the start of the conflict between the U.S., Israel, and Iran, gold has seen a cumulative decline of approximately 15% from its pre-war highs.

Market analysis indicates that the core reason for gold's current 'safe-haven failure' is that it has become the most crowded trade of the past year.

Over the past year, massive speculative capital has poured into the gold market, as evidenced by the changes in holdings of the world's largest gold ETF, the SPDR Gold Shares. Since last autumn, gold prices have even begun to fluctuate in tandem with hot stocks favored by retail investors, making its speculative nature quite apparent.

Some investors used leverage to increase their positions in gold. When market risk appetite reversed, they were forced to sell gold while simultaneously covering short positions in equities, resulting in a stampede-like sell-off. Although the exact scale of leverage in the gold market is difficult to quantify, the concentrated influx of speculative funds is an indisputable fact. As these funds accelerate their exit, the downward pressure on gold prices is unlikely to ease in the short term.

As for how much longer the unwinding of this crowded trade will last, there is currently no clear consensus in the market.

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