A Warning Sign? Record Inflows into Asian Gold ETFs
Asian investors are pouring into gold ETFs at record levels, raising concerns in the market that the gold price rally may be nearing its peak. High levels of retail buying are often seen as warning signals indicating assets are overvalued and the rally is in its late stages.
On Friday, according to Bloomberg data, net inflows into precious metal ETFs in Asia reached $7.1 billion in January, with several funds posting the highest capital inflows in their history. Chinese-listed funds saw the largest increases, with the Hua'an Easy Gold ETF attracting $1.9 billion in inflows from a single fund.
Gold prices have soared recently, rising over 20% since early January despite a pullback on Friday. Market analysts warn that the recent price moves have become rapid, emotional, and nonlinear—warning signs that the trend has become overly extended on a tactical level.
Gold's Relative Strength Index (RSI) has climbed to around 90—an extremely rare and overbought level (usually 70 is considered overbought). In its outlook for 2026, published last month, the World Gold Council noted that if Trump administration policies succeed, economic growth will accelerate, leading to higher interest rates and a stronger dollar, which could drive gold prices lower.
Chinese Market Drives Main Fund Inflows
Chinese-listed gold ETFs attracted a large amount of capital in January. In addition to the $1.9 billion inflow into Hua'an Easy Gold ETF, the China Asset Management Gold ETF drew $420 million, and the GF Shanghai Gold ETF attracted $191.4 million, all setting historical records.
Silver ETFs were also sought after. The Samsung KODEX Silver Futures Special Asset ETF listed in Korea recorded net inflows of $231.6 million in January, another record.
China's only pure silver fund—SDIC UBS Silver Futures LOF—suspended subscriptions on Wednesday and halted trading on Friday. Prior massive capital inflows led to a large premium over its underlying asset, highlighting the market's frenzy.
Professional Investors Signal Caution
"We have been major gold bulls in this cycle," said Nick Ferres, Chief Investment Officer at Singapore's Vantage Point Asset Management, whose firm has bought both gold mining stocks and ETFs. "However, recent price action has become rapid, emotional and nonlinear—warning signs that the trend is tactically overextended."
Gold's swift rise has been supported by heavy central bank buying and ETF inflows. According to World Gold Council data, apart from May last year, total holdings in gold-backed funds have increased every month. Precious metals have also benefited from the unpredictability of US policymaking and the outflow of US dollars due to increasing American isolationism.
New Products Emerge to Meet Demand
According to Bloomberg Industry Research, asset management companies are preparing to launch new products to respond to the surge in gold ETF demand.
Analysts Rebecca Sin and Michelle Leung wrote in their research report: "ETF issuers may meet demand for safe-haven assets by launching more gold-related funds. Hong Kong offers a range of instruments from low-cost physical trackers to leveraged futures and mining stocks. Two new funds were listed this week, aiming to consolidate Hong Kong's position as a gold trading hub."
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