Gold outlook remains positive despite volatility as ETF inflows, central bank buying rise

Gold prices are expected to remain well supported in the coming months, even as short-term volatility persists following a sharp rally and subsequent correction earlier this year. According to a latest Gold Report by Geojit Investments, dated February 10, 2026, bullion has stabilised above the psychologically important level of $5,000 per troy ounce, after an episode of extreme volatility erased nearly half of January’s gains.

Gold had touched a record high of $5,594 per ounce on the London spot market in January before heavy month-end liquidation set in. The pullback was driven by easing geopolitical tensions and a shift in expectations around US monetary policy, including speculation that a more hawkish Federal Reserve leadership could emerge. Despite this correction, prices in both LBMA and COMEX markets have remained above $5,000, posting gains of over 10% on a monthly basis, underscoring the strength of underlying demand.

Investment demand

A key pillar supporting the gold outlook is robust investment demand. The report highlights that total global gold demand in 2025 surpassed 5,000 tonnes for the first time, pushing the total market value to an unprecedented $555 billion, a 45% year-on-year increase. Investment flows played a central role, with global gold exchange-traded fund (ETF) holdings rising by 801 tonnes, the second-strongest annual increase on record. Bar and coin demand also surged to a 12-year high, reflecting heightened safe-haven buying.

Momentum has carried into 2026. January witnessed the strongest-ever monthly inflow into gold ETFs, at $19 billion, lifting global ETF assets under management to a record $669 billion. Total global holdings climbed to an all-time high of 4,145 tonnes, signalling continued investor confidence in gold as a hedge against macroeconomic and financial risks. 

Central bank demand

Central bank demand remains another crucial support factor. Reported net purchases in 2025 stood at 328 tonnes, only marginally lower than 2024 levels. China’s central bank, the People’s Bank of China, extended its gold buying streak for a 15th consecutive month in January, reinforcing the role of official sector demand in underpinning prices.

Gold prices

In India, domestic gold prices have outperformed global benchmarks, aided by currency weakness. On the MCX, gold prices rose about 8% over the last month, as the rupee slid to an all-time low of ₹92 against the US dollar in late January. The depreciation amplified the impact of global price gains, making gold one of the better-performing assets in the domestic market.

Looking ahead, the report expects gold prices to remain range-bound in the short term but positive over the medium to long term. While easing geopolitical tensions and delayed US rate cuts could cap near-term upside, structural drivers—including sustained central bank purchases, strong ETF inflows and a renewed negative correlation between gold and the US dollar—are likely to keep bullion well supported. Analysts note that once the current phase of profit booking subsides, market focus is expected to return to these underlying fundamentals, reinforcing gold’s role as a strategic portfolio asset in an uncertain global environment.