Investors have watched shares across the gold sector rocket higher in the past few sessions in response to Britain’s shock decision to leave the European Union.

Spurred by a rising gold price on the back of heightened uncertainty and fear, the S&P/ASX 200 All Ords Gold (Index: ^AXGD) (ASX: XGD) index enjoyed a remarkable rally. The index rallied as high as 5,120 points from 4,492 points at Thursday’s close – a jump of 14% across three days.

By the end of yesterday’s session, however, it was clear that the rally had lost some of its steam. The index ultimately closed 3.2% lower for the session at 4,851 points, which was 5.3% below its daily peak.

Source: Google Finance

Source: Google Finance

Many of the shares in the sector endured some shocking losses as well, reversing some of their magnificent gains from prior sessions. EVOLUTION FPO (ASX: EVN) dropped 3.9%; Beadell Resources Ltd (ASX: BDR) lost 5.6%, and St Barbara Ltd (ASX: SBM) declined 8.5%.

Meanwhile, Newcrest Mining Limited (ASX: NCM) shed 2.7% and Regis Resources Limited (ASX: RRL) shaved 5.4%.

It’s important to note that despite these losses, some of these shares were still showing gains since Thursday’s close. However, yesterday’s heavy losses in the gold sector could also be an indication that investors are finally coming to terms with Brexit, even though it remains unclear what exactly that could entail for Britain, Europe and the entire global economy.

Shares in a number of other ‘defensive’ businesses also fell yesterday, providing further evidence that some investors are feeling more comfortable moving into shares with higher perceived risks. Telstra Corporation Ltd (ASX: TLS), for instance, rose on Friday but declined 1.1% yesterday, while CSL Limited (ASX: CSL) also dropped 0.8%.

This doesn’t mean that the volatility is behind us, or that investors should pile all of their money back into riskier shares. What it does highlight, however, is that Brexit wasn’t the end of the world and that investors have had time to reassess which businesses they believe may have been oversold.

Given the events that have unfolded in recent days and the level of uncertainty going forward, I doubt this is the end for gold shares. However, this does act as a reminder that gold can fall out of favour when investors become more confident, just as fast as it can gain popularity when uncertainty rises.

Regardless of where the price of gold goes in the near-term, volatility will subside over time, which means long-term investors may want to focus on some of the other great opportunities elsewhere in the market.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.