As 2026 begins, retail investors are mirroring the playbook of global central banks by aggressively accumulating gold to hedge against risks stemming from a fragmenting world order. Investors have increased their purchases of physical gold bars and coins, but more notably, global gold ETFs have seen record monthly inflows in January. This has fueled heightened volatility in the precious metals market and suggests gold may still face near-term selling pressure.

Roukaya Ibrahim, Chief Commodity Strategist at BCA Research, stated that investment demand for gold ETFs, particularly from Asian regions such as China, has been a key driver of gold prices in recent months. In a research report released on Tuesday, she noted that Asian investors are "highly trend-following and price-sensitive," meaning any price pullback could trigger liquidation, leading to significant short-term declines. Ibrahim highlighted that over the past year, inflows into gold ETFs have accounted for the majority of the increase in total investment demand, far exceeding purchases of bars and coins. According to the World Gold Council, global gold ETFs attracted $19 billion in inflows in January, the strongest monthly figure on record. Combined with a 14% surge in gold prices during the same period, the assets under management in global gold ETFs reached a record high of $669 billion, marking a 20% monthly increase. The SPDR Gold Shares ETF, the world's largest physically backed gold ETF, traded at $460.67 on Tuesday, down 1.4%, but has still gained over 16% year-to-date. However, using ETFs to hedge against global instability and diversify away from the U.S. dollar and Treasury bonds may amplify volatility in the precious metals market. Ibrahim explained that ETF flows are "more volatile than bar and coin demand" because ETF investors tend to make "tactical allocations and enter quickly," whereas physical gold buyers seek "long-term value storage." As a result, ETF investors are more sensitive to price movements and market dynamics: "If gold prices decline for several consecutive weeks, they will sell," meaning the more reliant gold's rally is on ETF inflows, the greater the volatility. This may explain recent sharp price swings. Gold futures for April delivery on the COMEX hit a record closing high of $5,354.80 per ounce on January 29, then plunged approximately 13% over the following two trading sessions on January 30 and February 2, briefly falling below the key $5,000 level. Prices have since recovered most of the losses, settling at $5,031 on Tuesday, down 1%. Ibrahim suggested that even if another price pullback triggers liquidation—especially among Asian investors—global investment demand will continue to support higher gold prices over the long term. She noted that central banks in emerging markets will continue to diversify their foreign exchange reserves, increasing gold holdings during price dips. Thus, central bank buying is expected to provide a floor for gold prices, "preventing any correction from turning into a prolonged bear market." Additionally, she pointed out that the current gold bull market is "not exceptional by historical standards," with gains lagging behind those seen during the major bull markets of 1971–1974 and 1976–1980. "In terms of duration, this bull market is still young," she added, noting that over the past 55 years, every major gold bull market has been interrupted by multiple sharp sell-offs. Therefore, if gold is indeed in a long-term bull market, recent price corrections are consistent with historical patterns observed during extended upward trends, according to BCA Research. Wells Fargo shares this optimistic outlook. The bank sees no reason for continued investor panic and advises clients to buy on dips, anticipating a fresh rally in the precious metal soon. Analyst Edward Lee wrote in a Monday report, "The recent pullback appears to be a healthy correction following an exceptionally strong rally. Between January 22 and 29, gold traded more than 30% above its 200-day moving average—a level that is difficult to sustain and often triggers profit-taking. We expect a period of consolidation after such a rapid advance." In fact, Wells Fargo expects the gold rally to regain momentum and has raised its year-end 2026 price target to a range of $6,100–$6,300 per ounce. This implies at least a 20% upside from current levels, reflecting the bank's view that such declines represent opportunities to increase gold exposure rather than take profits. Lee wrote, "We do not believe the bull market is over. Our view is that gold will continue to benefit from persistent geopolitical uncertainty, macroeconomic volatility, and ongoing central bank purchases."