In early 2026, international gold prices staged a dramatic performance of "soaring" and "plunging."
Spot gold surged from around $4,320 per ounce, breaking through multiple key levels to reach a peak of $5,598 per ounce, achieving a cumulative increase of up to 29% at one point, with a two-week gain of 21%.
Three major drivers of gold prices—the National Bank of Poland, stablecoin giant Tether, and the largest gold ETF, SPDR Gold Shares—have aggressively accumulated gold over the past year, with combined holdings nearing 1,780 tonnes.
However, starting at 22:30 Beijing Time on January 29, gold prices began experiencing extreme volatility. On the evening of January 30, U.S. President Trump's nomination of Kevin Warsh as the next Federal Reserve Chair further triggered a "plunge" in gold prices. By the close on January 31, spot gold had tumbled nearly $670 over approximately 30 hours, falling below $4,900 per ounce.
After the frenzy, what lies ahead for gold?
On January 30, gold recorded its largest single-day drop since 1983. Spot gold saw its intraday decline widen to 12% at one point, hitting a low of $4,682 per ounce. By the close, it had fallen 9.25% for the day to $4,880 per ounce.
Simultaneously, spot silver plunged over 36%, marking its largest intraday decline in history, briefly touching a low of $74.28 per ounce. By the close, spot silver was down 26.42% to $85.259 per ounce.
The market widely views President Trump's nomination of Kevin Warsh as the next Federal Reserve Chair as the trigger for the sharp decline in gold and silver.
Warsh, born in April 1970, earned a Bachelor of Arts from Stanford University and a Juris Doctor from Harvard Law School.
Warsh possesses a cross-sector career spanning Wall Street, the White House, and the Federal Reserve. In 1995, he joined the M&A department of Morgan Stanley's New York office. In February 2002, Warsh left Morgan Stanley to join the George W. Bush administration, serving as Special Assistant to the President for Economic Policy and Executive Secretary of the White House National Economic Council.
On February 24, 2006, Warsh was sworn in as a member of the Board of Governors of the Federal Reserve, becoming the youngest Fed governor at the time.
Warsh's tenure as a Fed governor coincided with the 2008 financial crisis; his Wall Street background positioned him as a key liaison between the Fed and the markets. Although his term was originally set to expire in January 2018, he chose to resign in March 2011.
Regarding his relationship with Trump, Warsh's father-in-law—Ronald Lauder, heir to the Estée Lauder Group—shares a close relationship with Trump. Lauder and Trump were classmates and have known each other for over 60 years; Lauder is reportedly one of the earliest to have suggested to Trump the idea of purchasing Greenland.
Trump interviewed Warsh for the Fed Chair position in 2017 but ultimately selected then-Fed Governor Jerome Powell. Since then, Trump has repeatedly expressed regret over that decision publicly.
Trump has consistently sought a candidate widely accepted by the markets who would implement his demands for significant interest rate cuts. He has repeatedly emphasized his selection criteria—the new Fed Chair "must support low interest rates."
On monetary policy, Warsh has long been known as an "inflation hawk." He emphasizes discipline and Fed independence and supports balance sheet reduction. However, in recent months, Warsh has publicly supported lowering interest rates, aligning with Trump—a stark contrast to his longstanding hawkish image.
David Rosenberg, founder of Rosenberg Research, wrote in a client note on Friday: "The current market reaction suggests investors are shifting their Fed expectations toward a 'more hawkish' and 'more traditional policy path,' with concerns about compromised central bank independence slightly easing. There appears to be some unwinding of the so-called currency debasement trades in the market."
José Torres, Senior Economist at Interactive Brokers, described the precious metals sell-off as a "knee-jerk reaction" to Trump's Fed Chair nomination. He stated: "Trump wants a dovish Fed Chair, but Warsh has historically been a staunch inflation-fighting hawk. I think the market is currently very confused, uncertain about what kind of Warsh will be leading the Fed."
The U.S. Dollar Index, which had fallen 11% over the past 12 months, surged sharply following Trump's announcement of his Fed Chair nominee, posting a single-day gain of 1.01% on January 30.
Art Hogan, Chief Market Strategist at B. Riley Wealth Management, told media that the sharp spike in the dollar acted as the direct trigger for this wave of precious metals selling.
Gold has surpassed U.S. Treasuries to become the largest reserve asset for global central banks outside the Fed. Data from the World Gold Council (WGC) shows that from 2022 to 2024, global central banks' annual gold purchases exceeded 1,000 tonnes for three consecutive years.
In 2025, global central banks were net buyers of 863 tonnes of gold. Among them, the National Bank of Poland alone purchased approximately 100 tonnes, becoming the largest central bank buyer for the second consecutive year. Gold constitutes 28.22% of Poland's foreign exchange reserves.
Poland's gold accumulation campaign began in 2018, driven by Governor Adam Glapiński.
In 2016, Poland's gold reserves were only about 103 tonnes, representing just 3.32% of its foreign exchange reserves.
Between 2018 and 2019, the Polish central bank purchased 125.7 tonnes of gold and repatriated 100 tonnes stored at the Bank of England to domestic vaults.
In 2023, the Polish central bank added 130 tonnes to its gold reserves, becoming the world's second-largest central bank gold buyer that year.
In 2024, the Polish central bank became the annual largest central bank gold buyer for the first time.
By the end of 2025, Poland's gold reserves had accumulated to 550 tonnes, ranking 12th globally.
On January 20, 2026, the Polish central bank announced it had approved a plan to purchase 150 tonnes of gold, which would increase its reserves to 700 tonnes, placing Poland among the top 10 countries with the largest gold reserves globally.
The primary reasons for Poland's sustained large-scale gold accumulation stem from the complex geopolitical environment in Eastern Europe and uncertainties in the global financial system. Essentially, it aims to build a financial safety firewall using gold, a "zero credit risk asset."
Marta Bassani-Prusik, Director of Investment Products and Foreign Exchange Value at the Polish Mint, pointed out that gold prices are unaffected by monetary policy and credit risk, coupled with the need for asset diversification and reducing the share of currency reserves like the U.S. dollar, are key motivations for central banks' gold purchases.
Beyond central banks, global stablecoin giant Tether has become a significant buyer in the physical gold market.
According to statistics, Tether purchased over 70 tonnes of gold in 2025, exceeding the purchases of all central banks except the National Bank of Poland.
Currently, Tether's total gold reserves amount to 140 tonnes, ranking it among the world's largest gold holders. Its holding size is second only to central banks, exchange-traded funds, and large commercial banks, comparable to the gold reserves of central banks like South Korea, Hungary, and Greece, making it arguably the world's largest private gold vault.
Its gold reserves are stored in a former nuclear bunker in Switzerland, protected by multiple steel doors, with 1–2 tonnes of gold transported in weekly.
Recently, CEO Paolo Ardoino revealed that Tether plans to maintain this purchasing pace for "at least the next few months." Based on this calculation, Tether's gold accumulation this year could reach 52–104 tonnes; if it accumulates at the upper limit, its gold reserves would exceed 240 tonnes by year-end.
Concurrently, Tether plans to allocate 10%–15% of its investment portfolio to physical gold, aiming to become "one of the world's largest 'gold central banks'."
Tether's massive gold accumulation is fundamentally aimed at providing value backing for its cryptocurrency business, leveraging gold's stability to address trust crises and high volatility issues associated with cryptocurrencies.
First, it provides underlying support for the gold-backed token Tether Gold (XAUT). As of the end of December last year, the gold backing XAUT tokens amounted to 16.2 tonnes.
Second, it diversifies the reserve assets backing the US dollar stablecoin USDT. Tether's Q3 audit report showed that as of the end of September last year, gold in the reserves backing USDT was valued at $12.9 billion, equivalent to approximately 104 tonnes of gold at then-prevailing market prices.
Global investors are allocating to gold ETFs on an unprecedented scale. The world's largest gold ETF—SPDR Gold Shares (GLD)—is a key channel.
Since its listing in November 2004, GLD's holdings have become a crucial market indicator. As of January 29, 2026, GLD's gold holdings stood at 1,086.53 tonnes, with corresponding Assets Under Management (AUM) nearing $188.7 billion. This massive holding, aggregated from global investor funds, has become a significant buyer force influencing the gold market.
GLD has altered the valuation logic of gold.
Dodd Kittsley, a veteran ETF industry professional, noted that before GLD's launch, individual gold investment was cumbersome and costly. The emergence of this ETF made investing in gold nearly as cost-effective as trading ordinary stocks. After GLD's listing, gold was rapidly incorporated into most investors' asset allocation frameworks, becoming a key instrument for diversifying investment risk.
Société Générale's latest report quantified the relationship between GLD and spot gold prices: Since 2010, every 100 tonnes of inflows into gold ETFs has correlated with a 3.6% rise in gold prices. Since October 2025, this effect has intensified to a 9.2% price increase.
After hitting a high of $5,598 per ounce, gold suddenly faced large-scale selling starting at 22:30 on January 29. By the close on January 31, it had "plunged" nearly $670 over approximately 30 hours.
Wang Yongzhong, Director of the International Commodities Division at the Institute of World Economics and Politics, Chinese Academy of Social Sciences, stated in an interview that the recent surge in gold prices essentially represents a market response to multiple risks, with the core logic being hedging against U.S.-related risks, analyzed from three dimensions:
First, hedging geopolitical risk. The current highly tense global geopolitical landscape makes gold a "hard currency for避险."
Second, hedging U.S. dollar credit risk. The deterioration of U.S. debt problems has heightened expectations of diminished dollar purchasing power, causing dollar-denominated gold to appreciate. Simultaneously, the "weaponization" of the dollar has raised global doubts about the safety of dollar-denominated assets.
Third, hedging policy risk. If the new Fed Chair acts entirely under the U.S. government's direction, it could lead to sustained interest rate cuts and a "weak dollar" policy. When market trust in the dollar system wanes, gold's alternative value becomes prominent.
Regarding the outlook, Wang Yongzhong noted that in the short term, gold may enter a phase of "volatile digestion." However, if new risk events emerge, such as an escalation of geopolitical conflicts, gold prices could rebound rapidly.
Calculated from the peak, gold prices had surged over 21% in two weeks. On January 29, Deutsche Bank analyst Michael Hsueh pointed out that such a rapid increase has only occurred a few times in the past fifty years.
When gold's two-week gain exceeds 20%, the probability of further price increases over the next six months plummets to 38%, with an average gain of 11%. Conversely, the probability of decline rises to 62%, with an average decline of 1%.
Nevertheless, most investment banks remain bullish on gold in recent reports. Société Générale, Bank of America, Citigroup, and Deutsche Bank have set target prices of $6,000 per ounce. Deutsche Bank also projected that, under a scenario of a weaker dollar, gold prices could potentially reach $6,900 per ounce.
However, HSBC forecasts a gold price target of $4,450 per ounce for 2026, while Barclays predicts gold will be at $4,550 per ounce by the end of 2026.
Disclaimer: The content and data herein are for reference only and do not constitute investment advice. Please verify before use. Any actions taken based on this information are at your own risk.
Cover image source: AIGC.
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