Global market sentiment this morning (Friday) was in a state of anxiety following early warnings of the bursting of the ‘AI bubble’ that is beginning to affect the value of major assets worldwide.
The simultaneous fall in technology stocks and precious commodities such as gold has raised questions among the investor community about the stability of the current economy.
Wall Street Falls, Nasdaq Falls 2%
The US stock market closed lower yesterday with the Nasdaq index recording a fall of 2%, while the S&P 500 fell 1.6%.
The massive sell-off was driven by investor concerns over the return on investment (ROI) of technology giants which is considered not commensurate with the billions of ringgit spent on AI infrastructure.
The “Magnificent Seven” companies including Nvidia, Apple, Microsoft, and Amazon faced selling pressure that saw their market value lose billions of dollars in a single session.
Non-tech sectors such as logistics, finance, and real estate were also affected. Investors are worried that traditional business models will be disrupted or become irrelevant due to the rapid pace of AI automation.
Gold and Silver Face Volatility?
Although gold is usually considered a safe haven asset, the price of the yellow metal fell sharply this morning.
Worse, silver prices were reported to have plunged by up to 9% in a short period of time.
The fall in AI stock prices forced investors to seek immediate cash to cover losses. This triggered emergency sales of liquid assets such as gold to pay margin calls from brokers.
The use of AI trading bots accelerated the price decline.
As soon as gold crossed psychological support levels, these algorithms automatically triggered sell orders, thus worsening the market situation.
Overall, the market is currently experiencing a drastic correction phase.
This uncertainty is not only caused by concerns about the true value of AI technology gains, but it is also triggered by investors who are forced to sell safe assets such as gold to cover losses in the stock market.
