Gold falls below $5,170! Record inflows of funds in Asian precious metals ETFs may become a signal of gold price hitting its peak.

On Thursday night Beijing time, gold plunged significantly - after hitting a historical high of $5598.75 per ounce earlier in the day, it dropped by 5.9% in the evening to a low of $5097.36 per ounce. As of the time of writing, spot gold has dropped by over 4%, to $5169.44 per ounce. After repeatedly hitting new highs and approaching the $5600 mark, gold turned sharply downward, leading investors to question whether the current upward trend in gold is coming to an end. Another sign exacerbating investors' concerns is that Asian investors are pouring record amounts of money into gold Exchange-Traded Funds (ETFs). Data shows that precious metal ETFs listed in Asia saw net inflows of $7.1 billion in January, with several ETFs attracting historically high levels of funds, mainly from retail investors in China. The rapid rise in gold prices in this round has been supported by central bank purchases and inflows into ETFs backed by physical gold. Data from the World Gold Council shows that the holdings of gold-supported funds have been growing monthly, except in May of last year. Gold's upward trend has continued since the start of 2026. The new foreign policies of the US government have impacted the global political and economic order, such as actions in Venezuela and claims on the sovereignty of Greenland. Confidence in the US and US dollar assets has been severely shaken worldwide, leading to gold hitting new highs. Despite a significant pullback on Friday, the increase in gold prices so far this year remains over 20%. However, large-scale purchases by retail investors are often seen as a sign that the uptrend is entering a later stage, with assets being overvalued. Nick Ferres, Chief Investment Officer of Singapore-based Vantage Point Asset Management, said, "We have been very bullish on gold throughout this cycle, buying gold mining stocks and ETFs. However, the recent price action in gold has become rapid, emotional, and non-linear, which is a warning sign that the rally may be overdone." In other warning signs, gold's Relative Strength Index (RSI) has climbed to around 90, surpassing the usual level of 70 that typically signals a potential latecoming pullback. The World Gold Council noted in last month's "2026 Outlook" report that if the policies set by the Trump administration are successful, it will accelerate economic growth, leading to higher interest rates, a stronger US dollar, and ultimately, lower gold prices.