LONDON, Feb 3 (Reuters) - Investment demand and central-bank buying are expected to propel gold to new records, with the metal's retreat over the past two sessions already attracting bargain hunters, while silver will remain volatile, analysts said.

Gold was heading for its biggest daily gain since 2008 on Tuesday, after a massive two-day sell-off triggered by President Donald Trump's appointment of Kevin Warsh as the next Federal Reserve Chair, a stronger dollar and profit-taking. GOL/

"Inflation remains well above target, debt levels are rising, and investors continue to view precious metals as a way to diversify away from equities, bonds and fiat currencies," said Bart Melek, head of commodity strategy at TD Securities.

UBS and JP Morgan expect gold to hit $6,200-$6,300 by year-end, while Deutsche Bank sees bullion at $6,000 this year. Citi maintained its 2026 base-case forecast, expecting a first-quarter average at $5,000.

Spot gold XAU= was up 5.4% at $4,915 per troy ounce by 1054 GMT.

ALL EYES ON PHYSICAL MARKET

Gold and silver XAG= hit record highs of $5,594.8 and $121.6 respectively on January 29 before retreating. Gold's 9.8% slump on Friday was the largest daily fall in 43 years, according to the LSEG data.

Analysts see the drop as a healthy correction.

"The physical market will be key in setting the floor, particularly beyond the Lunar New Year," said Standard Chartered analyst Suki Cooper, referring to top consumer China's New Year holiday from mid-February.

Investment demand, including from the retail sector, has become a crucial factor behind gold's push higher as other sectors - jewellery demand and purchases from central banks - have stalled.

"We expect prices to remain volatile, even though the conditions remain for further significant upside this year," said Philip Newman, director at consultancy Metals Focus. Gold prices could exceed the $5,500 level, he added.

Volatility has been more acute in silver with its slump from Thursday's record high of $121.6 per ounce, due to the smaller size of the market. Its January rally was led by momentum trading and large inflows from retail investors.

Silver was last up 9.3% at $86.8.

With fears of U.S. tariffs fading after the mid-January critical minerals review and easing supply tightness in London, silver has lost a key driver of last year's gains, analysts at Mitsubishi said.

However, silver's drop from records is positive for its industrial consumption prospects as it removed extreme pressure on solar producers' margin, analysts said.