How the gamma squeeze propelled the gold plunge on Friday

SchrödingersNode · 2026-02-13T10:05:22+00:00

Friday's data revealed the intriguing dynamics of gold markets influenced by a gamma squeeze, driven by options expirations that triggered automated trading cascades, impacting prices significantly. Insights into traders' behaviors showed how strategic price levels led to heightened volatility and rapid liquidations.

SchrödingersNode

2026-02-13 10:05:22

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Friday’s data reveals a fascinating scenario of massive adjustments in the gold markets, driven by a well-known mechanism in the sector: the gamma squeeze. According to analysts at PANews, this Friday’s event perfectly illustrates how futures expiration creates cascades of automated transactions that amplify price movements.

Breaking Down the Gamma Squeeze and Its Impact on Options Positions

The gamma squeeze operates through a specific mechanism: when prices cross resistance levels marked by significant options positions, traders holding short options are forced to quickly rebalance their hedges. These adjustments manifest as accelerated purchases of futures contracts or ETF shares to neutralize their exposures. Conversely, Friday also showed how price declines can trigger rapid liquidations.

This dynamic was particularly evident on Friday with major expirations of the SPDR Gold ETF at levels of $465 and $455, two major psychological thresholds. Traders were also aware of large accumulated positions on CME Group’s March and April contracts, concentrated around $5,300, $5,200, and $5,100.

The Tightening of Strategic Price Levels: The Case of SPDR Gold and CME Group

On Friday, these levels were not just numbers on a chart—they represented inflection points where trader interests prompted a rethink of hedging strategies. Market makers facing the massive expirations on Friday had to navigate heightened volatility. The SPDR Gold ETF, as one of the most liquid products in the gold market, amplified these movements across the entire ecosystem.

The Role of Traders and the Cascade Reaction

Beyond mere technical mechanics, Friday highlighted how institutional traders’ behaviors interconnect to create exaggerated movements. As Friday approached, the accumulation of expiring positions turned each marginal adjustment into a signal of the overall market. This self-reinforcing process explains why a moderate theoretical decline can turn into an accelerated collapse.

Friday’s data underscores that gamma squeeze is not an isolated anomaly but a structural element of modern options markets. Understanding this mechanism helps anticipate how similar events will unfold in the future, especially during periods of massive expiration in gold-related contracts.

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