MW This chart explains why gold has been so volatile lately

By Myra P. Saefong

Global investment demand is supportive of higher gold prices in the long term, says BCA Research strategist

Gold prices have experienced high volatility lately.

Individual investors kicked off 2026 by taking a page from the playbook of global central banks and stockpiling gold as a hedge against a splintering world order.

Investors bought more physical bars and coins, but inflows into global gold exchange-traded funds were a standout - climbing to a record monthly high in January, contributing to volatility in the precious-metals market and threatening more short-term selloffs for gold.

Investment demand for gold ETFs, particularly from Asia, including China, has emerged as a critical driver of gold prices over the past few months, said Roukaya Ibrahim, chief commodity strategist at BCA Research.

Asian investors are "very momentum-driven and price sensitive" so a price correction could trigger an unwinding of their positions and produce a meaningful price drawdown in the near term, she said in a research note Tuesday.

Gold ETF inflows have accounted for the bulk of the increase in total investment demand over the past year, far outpacing investment in gold bars and coins, said Roukaya.

Global gold ETFs attracted $19 billion in January - the strongest month on record, according to the World Gold Council. Combined with a 14% surge in the gold price during the period, that lifted global gold ETF assets under management to a new record of $669 billion, which was a 20% increase on the month, it said.

The world's largest physically backed gold ETF, SPDR Gold Shares GLD traded at $460.67, down 1.4% in Tuesday trading, but it's up more than 16% year to date.

Yet buying ETFs as a way to hedge against a fracturing world order, diversifying beyond the U.S. dollar DXY and Treasurys BX:TMUBMUSD10Y, can make metals markets more volatile.

Gold ETF investors tend to aim for 'tactical allocations and fast exposure,' while those allocating to bars and coins seek a 'long-horizon store of value.'Roukaya Ibrahim, BCA Research

ETF flows are "relatively more volatile than demand for bars and coins," said Roukaya, as investors allocating to gold ETFs tend to aim for "tactical allocations and fast exposure," while those allocating to bars and coins seek a "long-horizon store of value."

Given that, ETF investors are more responsive to prices and current market dynamics, she said. "They will sell gold if its price corrects for several weeks" - so greater reliance on ETF flows to drive demand will increase volatility in gold prices.

That may help explain the big moves the gold market has seen in recent days. On Comex, gold for April Delivery (GCJ26) (GC00) climbed to record-high settlement on Jan. 29 of $5,354.80 an ounce, then traded below the key $5,000 mark during two-session drop on Jan. 30 and Feb. 2 of roughly 13%.

Prices have recovered much of those losses to trade at $5,031, down 1% Tuesday.

If prices do see another correction and trigger an unwinding of positions, particularly among Asian investors, Roukaya said that ultimately, global investment demand will still support higher gold prices in the long term.

Emerging market central reserves will continue their diversification efforts, and will accumulate more gold on corrections, she said, so central bank demand is likely to "provide a floor" for the metal's prices - "preventing any correction from morphing into an extended bear market."

Besides, the current bull market for gold "isn't exceptional by historical standards," said Roukaya. It lags both the 1971 to 1974 and 1976 to 1980 bull markets in terms of price gains, she said.

"In terms of duration, this bull market is young," she said. Also, every major gold bull market of the past five-and-a-half decades was interrupted by multiple major selloffs, she said.

So, if gold is indeed in a secular bull market, as BCA Research believes, the latest drawdown in prices is consistent with the behavior of previous long-term rallies, Roukaya said.

-Myra P. Saefong

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February 10, 2026 15:06 ET (20:06 GMT)

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