Global gold prices experienced a historic plunge and rebound, leading to a contraction of over 400 billion yuan in the scale of 20 domestic gold-themed ETFs within a week. Despite market divergences, institutions reiterate the medium- to long-term allocation value of gold.

The gold market underwent a roller-coaster fluctuation over the past week. On January 29, spot London gold hit a record high, approaching $5,600 per ounce, before plummeting over 15%, and then staging a strong rebound from lower levels.

Accompanying the sharp volatility in international gold prices, the scale of domestic gold-themed ETFs shrank significantly. According to Wind data, in the recent week (from January 29 to February 4), the total scale of 20 domestic gold-themed ETFs decreased by approximately 427 billion yuan, bringing the total down to 3,489.54 billion yuan.

From a capital flow perspective, about 1.89% of the funds in gold-themed ETFs were redeemed during the week, resulting in a net outflow of roughly 66 billion yuan. However, the larger cause of the scale contraction was the passive reduction due to net value declines, accounting for about 361 billion yuan.

Analysts suggest that domestic investors did not engage in panic selling, but rather adjusted positions based on short-term sentiment. Multiple industry insiders pointed out that the long-term allocation rationale for gold remains unchanged, though short-term strategies should focus on avoiding volatility, buying on dips, and refraining from blindly chasing rallies or selling in downturns.

Net redemptions totaled 66 billion yuan during the volatile week. Since the beginning of the year, the gold market had shown a unilateral upward trend. The price of spot London gold climbed steadily, reaching an intraday high of $5,598.75 per ounce on January 29, with a year-to-date increase of 30%.

Domestic gold prices moved in sync with international trends, with the SGE Gold 9999 price on the Shanghai Gold Exchange hitting a high of 1,256 yuan per gram on the same day, up about 29% year-to-date.

However, market sentiment shifted abruptly. On January 29, spot London gold closed slightly down by 0.68%. The real turbulence occurred the next day (January 30), when spot London gold plunged 9.25% to close at $4,880.034 per ounce.

After sentiment fermented over the weekend, gold prices fell another 4.52% on February 2, closing at $4,659.29 per ounce. But in the following two trading days (February 3 to 4), gold staged a dramatic rebound, rising 6.16% and 0.38% respectively, recouping some losses.

Overall, spot London gold fell from $5,413.805 to $4,964.83 per ounce over the week, a drop of 8.29%. Domestic SGE Gold 9999 declined 8.26% during the same period, largely in sync.

The sharp volatility in gold prices quickly transmitted to the ETF market. By February 4, the total scale of 20 domestic gold-themed ETFs stood at 3,489.54 billion yuan, down approximately 426.82 billion yuan from the previous week.

Of this, net outflows due to investor redemptions amounted to about 66.03 billion yuan, while net value shrinkage caused by falling gold prices accounted for roughly 360.80 billion yuan.

Daily data indicate that capital flows did not simply mirror market performance. On January 30, when gold prices plummeted, the scale of the 20 gold-themed ETFs shrank by 237.40 billion yuan, yet there was a net subscription of 23.38 billion yuan, suggesting some investors attempted to "buy the dip."

Significant outflows occurred in the subsequent two days. On February 2 and 3, the 20 ETFs saw net redemptions of 20.29 billion yuan and 90.85 billion yuan, respectively. However, by February 4, as gold prices rebounded, capital flows turned to a net inflow of 21.74 billion yuan.

Bi Mengran, a researcher at Geshang Funds, analyzed that the decline in domestic gold-themed ETF scale was primarily passive, with relatively moderate active net redemptions. "The 66 billion yuan in net redemptions, compared to the overall scale and the extent of net value shrinkage, indicates that domestic investors did not engage in panic selling but rather made short-term sentiment-driven adjustments."

Bi noted that the exiting funds were mainly composed of "short-term speculative capital," "cautious short-term allocation funds," and "passive follow-the-crowd capital."

Short-term speculative capital (such as hot money, high-frequency trading funds, and retail speculators) aims primarily to capture short-term price differences, characterized by quick entry and exit with strict stop-loss and take-profit measures. Such capital exits decisively when specific conditions are triggered.

Cautious short-term allocation funds (including some bank wealth management funds and short-term institutional allocations) invest in gold ETFs for "short-term hedging and portfolio risk diversification" rather than long-term holding. They tend to exit when market hedging demand weakens, liquidity needs rise, or gold price volatility exceeds expectations, aiming to lock in gains or control losses.

"Passive follow-the-crowd capital" mainly consists of retail investors lacking independent market judgment, exhibiting clear herd behavior—buying and selling based on trends. When gold prices fall continuously and market panic emerges, these investors follow the crowd in redeeming; when prices rebound and sentiment improves, some may buy back in, but if the rebound falters, they quickly exit. This behavior amplifies short-term capital flow volatility and is highly correlated with the short-term changes in domestic ETF net redemptions.

The debate between short-term adjustments and long-term investment logic among institutions regarding the gold price shock is ongoing. Market analysis generally views the event as a technical correction and sentiment release after the previous rapid rally, rather than a reversal of the long-term trend.

Yang Delong, Chief Economist at Qianhai Kaiyuan Fund, pointed out that one immediate trigger was concern over the hawkish stance of the new Federal Reserve Chair, Walsh. "But this seems more a surface factor; the root cause lies in the excessively rapid and steep rise earlier: a gain of about $1,000 in just one to two weeks is unsustainable in the long run."

Huaan Fund believes the direct catalyst for this pullback was policy expectation panic triggered by the Fed Chair transition, but the fundamental reason was the overheated and crowded trading in gold preceding the drop.

Song Xuetao, Chief Economist at Guojin Securities, further stated that the core driver of the decline in gold and silver was large-scale profit-taking after the surge, which triggered a chain reaction of deleveraging, with no essential causal link to the Fed Chair nomination.

Interviewed institutions generally agree that the medium- to long-term investment logic for gold remains fundamentally unchanged. Bi Mengran highlighted three core supporting factors that remain solid:

First, the Federal Reserve's interest rate cut cycle persists; in the long term, rate cuts reduce the opportunity cost of holding gold. Second, global central banks continue to buy gold, indicating a clear trend toward de-dollarization. Third, gold's role as a hedge against international order risks and sovereign credit currency risks continues to be prominent in uncertain environments.

Regarding future market outlooks, institutional views diverge but commonly highlight volatility risks.

UBS provided scenario-based forecasts: an upside target of $7,200 per ounce and a downside target of $4,600 per ounce. The institution believes that a hawkish shift in the Fed's stance could exacerbate downside risks, while escalating geopolitical tensions might drive prices upward.

Galaxy Securities considers $5,000 per ounce a key support level for gold, with price direction depending on the dollar's further reaction to the Fed Chair nomination event and the emergence of new geopolitical risks.

Hong Hao, Managing Partner and Chief Investment Officer at Lianhua Asset Management, judged that gold and silver are likely to recover to previous highs, but this requires time for market sentiment to stabilize. He believes the price bottom for gold is slightly below $5,000 per ounce.

For investors, Yang Delong recommends treating gold as a medium- to long-term asset allocation, avoiding excessive short-term trading. "It is advisable to allocate about 20% of the investment portfolio to gold-related assets to help hedge portfolio risks and improve the risk-return ratio."

Huaan Fund cautions that while gold remains in a strong range short-term, investors should be wary of increased volatility after overheated trading, advising against blindly chasing highs and adhering to a steady allocation philosophy. In the medium to long term, gold is a scarce "order hedging tool" during a period of profound global restructuring.

Guan Xiaomin, a researcher at Geshang Funds, emphasized that in gold investing, it should be considered as part of a diversified asset portfolio rather than a single heavy-weight holding.

Guan stated that, medium- to long-term, the core logic supporting gold remains unchanged—amid weakening U.S. dollar credibility and ongoing deglobalization, gold still holds allocation value. However, she also reminded investors to avoid盲目追高 (blindly chasing highs), especially when market sentiment is overheated, and to remain cautious.

A public fund manager also admitted that近期对黄金投资宜保持谨慎 (recently, caution is advisable in gold investments), suggesting布局 after price corrections, "but from a long-term asset allocation perspective." The focus should shift from chasing short-term surges to examining long-term value. For short-term operations, it is essential to avoid volatility, buy on dips, and refrain from盲目追涨杀跌 (blindly chasing rallies or selling in downturns).