The sharp pullback in gold's record-breaking rally has unsettled the market, but Metals Focus believes the recent turbulence should not be mistaken for the conclusion of the bull run.
Following what was historically its largest single-day gain, the gold price almost immediately experienced its most significant single-day sell-off, introducing the kind of volatility typically associated with risk assets. However, Matthew Piggott, Head of Gold and Silver at Metals Focus, stated that these movements are neither surprising nor structurally damaging. He remarked, "Given the speed of the ascent, a correction was inevitable; this market needed to release some pressure."
Gold achieved a startling number of new highs in early 2026: it set more than a dozen record peaks in less than three weeks, while silver, at its peak, had surged 200% year-on-year. Piggott suggested that such extreme advances not only make a significant correction possible but are actually healthy for the market.
Although the gold price failed to hold the initial support level of $5,000 per ounce, with overnight selling pressure pushing it down to $4,402, it has since rebounded substantially from those lows.
Despite the extreme volatility, Piggott said he does not expect the price action to damage gold's reputation as a stable store of value.
He explained, "Today, most gold buyers are not seeking capital appreciation; they are buying for portfolio protection, currency debasement, and geopolitical risks. Short-term fluctuations do not change that."
However, he warned that sharp price swings could attract speculative capital, amplifying volatility at both extremes. He added that the true picture of market participation will only become clear after ETF and options data is fully reported.
Piggott further noted that gold and silver could continue to benefit from FOMO (Fear Of Missing Out) momentum, particularly from buyers who remained on the sidelines during last year's relentless rally. He stated, "For over a year, there was simply no dip. Now there is one, and this is precisely when physical buyers step in." While substantial speculative interest and options trading created a liquidity event around Friday's highs, Piggott said gold continues to benefit from solid fundamental demand, with central banks expected to remain steady buyers in 2026. Central bank gold demand is forecast to slow from around 850 tonnes in 2025, but Metals Focus still projects official purchases of 700 to 800 tonnes this year, significantly higher than pre-pandemic levels. Meanwhile, portfolio allocations to gold remain surprisingly low. Piggott pointed out, "On average, allocations are still in the low single digits. Even an increase from 3% to 4% would be sufficient to support a substantial rise in the gold price." He added that long-term investors, including pension funds, endowments, and family offices, remain under-represented in the market, presenting significant upside potential if participation broadens. Despite the volatility, Piggott said Metals Focus has not altered its core outlook following the correction. The firm expects gold to average $5,500 per ounce by mid-year and around $5,800 for the full year.
While some banks have presented bullish scenarios for gold reaching $6,000 to $8,000, Piggott emphasized that the structural drivers—debt, fiscal imbalances, de-dollarization, and geopolitical risks—evolve slowly, not overnight. He said, "These factors don't shift on a whim; they take years to play out."
In his view, the recent sell-off has not weakened the market but has instead strengthened it. He commented, "This adjustment was warranted and much needed. It has reset sentiment, attracted buyers, and given the market a more robust foundation."
As long as uncertainty remains high and confidence in fiscal discipline stays fragile, gold's long-term trajectory remains unchanged.
Piggott stated, "Volatility is unsettling, but in this market, it is not a warning signal; it is the cost of repricing risk."
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