A. SREENIVASA REDDY (ABU DHABI)
Gold extended its mercurial run in January, recording a string of fresh records as prices rallied sharply at the start of the year. The precious metal notched 12 all-time highs during the month and posted a 14% gain, marking one of its strongest monthly performances in recent years, according to the World Gold Council’s (WGC) January market commentary.
The rally pushed gold decisively above the $5,000-an-ounce threshold, with spot prices touching a record high of $5,307 per ounce on January 28, before easing to close the month at $4,982 per ounce, the report said. Despite the strong upward trend, trading conditions were volatile, with large intraday price swings recorded in the final two days of the month, signalling heightened activity in derivatives markets.
Investment demand continued to play a central role in supporting gold prices. Global gold exchange-traded fund (ETF) holdings rose by 120 tonnes in January, taking total holdings to a new record valued at $669 billion, according to the WGC. ETF inflows were led by Asia with 62 tonnes, followed by North America with 43 tonnes, while Europe recorded more modest inflows of 13 tonnes.
Looking ahead, the WGC said investment demand is expected to remain a key feature of the gold market in 2026, continuing to provide support for prices even if geopolitical tensions ease and monetary policy settings in the United States evolve. While the sharp price gains may warrant a pause, the council said the underlying drivers of demand remain intact.
The WGC also noted that macroeconomic conditions could reinforce gold’s appeal, particularly if inflation expectations rise again amid fiscal support measures and persistent budget deficits.
Meanwhile, according to the London Bullion Market Association (LBMA) benchmark, the gold spot price was trading at around $4,981.85 per troy ounce on February 6, after some cooling from January’s peaks. At current levels, the global spot price translates to about Dh588 per gram in the UAE local market.
Commenting on recent volatility, Zavier Wong, Market Analyst at eToro, said periods of consolidation are typical following sharp rallies. “After strong gains, phases of profit-taking and consolidation are normal, particularly when retail participation increases and short-term sentiment becomes crowded,” Wong said.
Retail activity can amplify price movements, he added. “Retail flows tend to accentuate moves in both directions, which can exaggerate pullbacks even when longer-term drivers remain intact.”
Wong said the recent softness in prices appears to be largely driven by profit-taking and positioning unwinds. “A firmer US dollar and rotation back into equities have also weighed on prices, as investors reassess near-term inflation risks, US policy signals and ongoing geopolitical uncertainty,” he said.
Looking ahead, Wong said gold prices may remain volatile in the near term as markets reset, particularly after the metal appeared technically overbought following its rapid rise. However, he noted that pullbacks do not necessarily undermine the broader investment case. “We are already seeing prices rally again. Persistent geopolitical tensions and macro uncertainty continue to support demand for precious metals, which are increasingly viewed as portfolio insurance rather than short-term trades,” Wong said.