Is the gold bull market still ongoing? Wall Street remains firmly bullish: Don't fear the technical pullback; Chinese buyers have become a strong pillar of the gold market!

Is the gold bull market still ongoing? Wall Street remains firmly bullish: Don't fear the technical pullback; Chinese buyers have become a strong pillar of the gold market!

The gold market at the start of 2026 unfolded an extreme "thriller."

Within just a few weeks, the spot gold price soared from $4,300 all the way to a historical peak of $5,600, only to plummet below $4,500 like a snapped kite. Such double-digit daily drops have only occurred twice in gold's history—once in 1980 and once in 1983.

Faced with a "flash crash," suspicion over the bursting of a gold bubble flooded the market. Yet, Wall Street giants like Barclays, UBS, and Deutsche Bank remained remarkably calm amid the turmoil.

In their view, this is not the end of the bull market, but a "healthy cleanup" after extreme squeezing. With macro narratives intact, gold is merely undergoing a "technical consolidation" on its way to the $6,000 target.

Meanwhile, a key support is that Chinese buyers are scrambling to buy gold. Deutsche Bank's report shows that Chinese investors are currently buying gold ETFs at more than three times last year's pace.

Big Bank Consensus: Technical Pullback After “Extreme Crowding”

The recent sharp adjustment in gold is viewed by Wall Street more as "technical" rather than "fundamental." UBS stated directly in its latest report:

Is the gold rally over? In short, our answer is no.

UBS believes the roughly 21% drop from the high is mainly a "major cleanup" of short-term speculative positions. The prior one-sided surge led to excessive crowding, and when profit-taking hit, the stampede effect was amplified. UBS strategist Joni Teves believes:

For now, short-term consolidation is needed and we think, in the long run, this pullback is beneficial to the market. This period should allow investors to build long-term strategic positions at more attractive entry points. We expect support levels to emerge nearby.

Barclays' analysis confirms this. Its model shows gold's fair value is currently around $4,000. Although the current premium persists, after dropping to $4,900, the premium has returned to a reasonable standard deviation.

The bank stresses that, given policy turbulence and damaged fiat credibility, gold’s long-term deviation from fair value is not a bubble but rather the market’s "forward risk pricing."

Don’t Panic—The Fundamentals Haven’t Changed

Despite violent price swings, major banks all emphasize: the underlying fundamentals driving gold’s long bull run have not changed much.

UBS writes:

From a fundamental viewpoint, we don’t think much has changed. We expect broad-based demand recovery including retail, institutional, and official sectors. This will ultimately drive gold to resume its upward trend and hit new highs in coming quarters.

Meanwhile, turmoil in the global macro environment remains gold’s “fuel.” Geopolitics, tariff policies, continued fiscal expansion, and worries about fiat currency depreciation, are forcing investors to view gold as the “final hedge.”

  • Dollar depreciation pressure under “fiscal dominance”:

Barclays points out that the core of Trump 2.0 era policy is “expansionary fiscal policy + tariff inflation.” With high US government debt and no intent to restrain it, such a "fiscal dominance" environment directly weakens US Treasuries’ safe-haven attributes. The long-term fear of fiat debasement hasn’t gone away; if anything, it’s aggravated by policy uncertainty.

  • Fed leadership change unlikely to alter “inflation drift”:

Though Trump’s Fed Chairman nominee Kevin Warsh is seen as a symbol of institutional continuity, Barclays believes the challenges of policy volatility won’t fade quickly. The bank calculated that every 1% rise in US CPI brings a 5% endogenous increase in gold prices. With inflation expectations at 3% for the next year, gold alone should have a 15% baseline return from “inflation drift.”

  • Geopolitics and “strategic autonomy”:

Deutsche Bank points out that global political and trade relationships are undergoing structural shifts. After Russia’s reserves were frozen, the global central banks’ demand for "strategic autonomy" hit unprecedented levels. Gold, as the sole “non-sovereign credit asset,” is shifting its reserve role from “yield-driven” to “survival-driven.”

Appearance of a “Mysterious Force”: Chinese Buyers Are Scrambling to Buy

In this gold price showdown, Deutsche Bank has captured a crucial variable: Chinese investors are becoming the “key pillar” of the global precious metals market.

Data shows that in January 2026 alone, Chinese gold ETF holdings increased by 940,000 ounces. Deutsche Bank analyst Michael Hsueh pointed out, if annualized at this pace, the increase in Chinese gold ETF holdings in 2026 may reach 11.5 million ounces.

What does that mean? In 2025, Chinese gold ETFs set a record, but the total increase was only 3.24 million ounces. This means Chinese investors’ current buying intensity is more than three times last year’s.

This demand is evident not only in gold. Deutsche Bank noticed that due to limited domestic investment channels, a certain Chinese silver futures fund saw an astonishing 62% premium in December last year. Despite risks, after a brief drop in January, the premium quickly surged back to 59%, even triggering trading halts.

Deutsche Bank sees the rise of this “Eastern pricing power” as building a solid support floor for global gold prices.

Chinese Investors: “Buying More as Prices Rise”

Diving deep into the Chinese market, UBS captured a vital structural change: High gold prices, while suppressing jewelry consumption, have triggered even stronger investment-driven demand.

UBS notes in its report that China’s “bullish sentiment” is at multi-year highs. In the past, rising gold prices would scare away Chinese consumers. But this time, Chinese investors are showing a “buy more as prices rise” behavior.

  • “Jewelry-to-investment” seesaw: UBS observes that while retail jewelry demand has slowed seasonally due to high gold prices, the gap has been fully filled by surging demand for physical gold bars and coins.
  • Offshore risk aversion: UBS says that Chinese onshore markets’ intense demand for asset preservation is driving funds into gold ETFs. Data shows China is now the strongest engine for global gold ETF inflows. This "risk aversion + asset rotation" driven buying is more sustainable and scalable than traditional gifting consumption.

UBS: Gold Allocations Still Low, $4,500 Is “Support”

UBS strategist Joni Teves points out that, despite large price swings, most long-term institutional investors still have low gold allocations. As gold prices fall, these sidelined or underpositioned investors will get the perfect entry point.

UBS predicts that around $4,500 there will be strong technical support and gold is expected to resume its upward trend and hit new highs in coming quarters.

Supporting this long-term outlook:

  1. Continued de-dollarization: Central bank demand remains strong; Poland’s central bank has approved plans to increase gold reserves from 550 tonnes to 700 tonnes, even at the cost of gold exceeding 30% of reserves; Korea’s central bank is considering ending its decade-long hiatus and resuming gold buying. UBS notes that, under structural trends of de-dollarization and diversification, the central banks’ “buying patch” will persist long term.
  2. Real yields blunted: In recent months, gold has shown “immunity” to Fed rate hike expectations and rising real rates, meaning the main driver of gold prices has shifted from “rate games” to “credit risk hedging.”

Deutsche Bank: $6,000 Target Unchanged—Pullback Is an Entry Point

For the outlook, Wall Street is highly unanimous: short-term consolidation, long-term still “shining.”

Deutsche Bank firmly maintains its $6,000/oz gold target, viewing the current adjustment as a mere minor blip in the broader trend.

Bank analyst Michael Hsueh wrote in a Feb 2 report that, including central bank buying, gold’s major thematic drivers "remain positive and we believe investors’ reasons for allocating to gold will not change."

Barclays: Gold Mining Stocks Remain Attractive

Apart from spot gold, Barclays highlighted a highly attractive arbitrage opportunity: gold mining stocks.

Historically, gold bull markets often last 2-4 years and yield gains of 200%-400%. Since October 2023, this cycle’s gains are just 170%. More importantly, EPS (earnings per share) growth in miners has yet to be fully released.

Barclays believes mining stocks are likely to see a strong catch-up rally once gold prices stabilize.

This round of the gold market’s "pause for thought" may well be in preparation for an even stronger sprint next time. As Wall Street analysts summarise: In the monetary uncertainty and geopolitical tension of 2026, gold’s allure isn’t just as a hedge—it is prized for the rare certainty it offers in an uncertain world.

Risk disclosures and disclaimersMarkets carry risks and investments require caution. This article does not constitute personalized investment advice or take into account the unique investment objectives, financial situation, or needs of any individual user. Users should consider whether any opinions, viewpoints or conclusions in this article suit their personal circumstances. Investments made based on this are at your own responsibility.