International spot gold staged a sharp rebound in early February, climbing back above $5,000 per ounce after two days of extreme selling that briefly pushed prices below $4,500. By the morning of February 4 the market had recovered to roughly $5,045, reversing some of the fastest moves in the metal since 1986.
The recent turmoil began on January 31, when gold plunged more than 12% intraday and briefly traded under $4,700, recording its largest single‑day percentage drop in about four decades. Selling continued into February 2, with prices tumbling toward $4,499 before risk sentiment started to normalise and buyers reappeared on Feb 3, producing one of the biggest one‑day gains since 2009.
Analysts attribute the violent oscillation to a mix of technical and fundamental drivers. Rapid speculative positions built up during the preceding rally invited profit‑taking once momentum faltered; higher margin requirements at the Chicago Mercantile Exchange forced some long positions to liquidate, amplifying downward pressure. Market commentary also linked the moves to shifts in US monetary‑policy expectations and dollar and Treasury‑yield movements, while softer geopolitical risk helped remove some safe‑haven premium.
The price gyrations have had a pronounced real‑world impact in China, where retail and small investors squabbled with each other over whether to sell and lock in gains or buy into the dip. Scenes at boutiques and bullion counters ranged from long queues at gold‑buyback windows to shoppers waiting hours to pick up jewellery, and traders reporting temporary stock shortages in popular investment‑bar sizes.
Financial commentators and industry figures urged calm and emphasised gold’s role as a portfolio hedge rather than a short‑term speculative instrument. Guangdong Gold Association analyst Zhu Zhigang recommended that households consider modest allocations — roughly 50–100 grams of physical gold — and that investors using gold ETFs set clear stop‑loss rules tailored to their risk tolerance. He and others warned ordinary investors to steer clear of futures unless they understand the leverage and volatility involved.
Despite the recent whipsawing, several professional forecasters remained bullish over a longer horizon. UBS raised its 2026 targets for gold to about $6,200 an ounce for the middle of the year, and some Chinese analysts continued to view a $6,400 target as attainable if central banks persist in buying bullion and if expectations of lower US policy rates re‑emerge.
The episode underscores two medium‑term realities: gold remains vulnerable to sudden flows from leveraged traders and margin dynamics, and it also retains structural support from central‑bank demand and the strategic role investors assign to it in portfolios. For markets, the lesson is that a high level of speculative exposure can turn even broadly supportive fundamentals into a volatile trading environment.
For investors, the practical takeaway is binary: treat gold as an insurance asset within a diversified portfolio with predetermined position sizes and exit rules, or accept that trading it for short‑term gains requires professional risk management. Given the mix of technical, policy and geopolitical forces still in play, expect wide intraday ranges to persist rather than a smooth path to any headline price target.