Published: Feb 02, 2026 - 11:55 PM
(Kitco News) - Gold’s dramatic pullback amidst its record-setting rally has rattled markets, but according to Metals Focus, the recent turbulence should not be mistaken for the end of the bull market.
After notching its largest one-day gain in history, followed almost immediately by its biggest single-day selloff, gold prices have delivered the kind of volatility usually reserved for risk assets. Yet Matthew Piggott, Director of Gold and Silver at Metals Focus, said in an interview with Kitco News that the moves are neither surprising nor structurally damaging.
“Given the pace of the run-up, a correction was inevitable,” he said. “This market needed to let off steam.”
Gold has recorded a staggering number of all-time highs in early 2026 — more than a dozen in fewer than three weeks — while silver surged as much as 200% year-over-year at its peak. According to Piggott, those extreme gains made a sharp pullback not only likely, but healthy.
Although gold prices were unable to hold initial support at $5,000 an ounce, and overnight selling pressure pushed prices to $4,402 an ounce, prices have bounced significantly off their lows. Spot gold last traded at $4,747.90 an ounce, still down nearly 3% on the day.
After falling to an overnight low of $71.31 an ounce, silver is trading roughly unchanged on the day at $82.01 an ounce.
Although gold and silver are seeing extreme volatility, Piggott said that he doesn’t expect the price action to undermine gold’s reputation as a stable store of value — echoing crashes seen in 1980 or 2011.
“Most gold buyers today are not chasing capital appreciation,” he explained. “They’re buying for portfolio protection, currency debasement, and geopolitical risk. Short-term volatility doesn’t change that.”
He warned, however, that dramatic price swings can attract speculative “tourist” capital, amplifying volatility at both extremes. The true picture of market participation, he added, will only become clear once ETF and options data are fully reported.
Physical Demand Is Still Doing the Heavy Lifting
Despite the futures-market drama, underlying physical demand remains robust. The British research firm noted that India continues to see solid physical demand for silver, as premiums spiked during Friday’s pullback.
Piggott added that gold and silver could continue to benefit from FOMO (fear of missing out) momentum, especially among buyers who sat on the sidelines through last year’s relentless rally.
“For more than a year, there simply wasn’t a dip,” Piggott said. “Now there is — and that’s exactly when physical buyers step in.”
Although significant speculative interest and options trading at elevated levels created a liquidity event on Friday, Piggott said that gold continues to benefit from solid fundamental demand, as central banks are expected to remain steady buyers through 2026.
Central bank gold demand is expected to ease from 2025’s roughly 850-tonne pace; however, Metals Focus still forecasts 700–800 tonnes of official-sector buying this year — well above pre-pandemic norms.
At the same time, portfolio allocations to gold remain surprisingly low.
“On average, allocations are still in the low single digits,” Piggott noted. “Even a move from 3% to 4% would be enough to support significantly higher prices.”
He added that long-term investors — including pension funds, endowments, and family offices — remain underrepresented in the market, leaving substantial upside if participation broadens.
Despite the volatility, Piggott said that Metals Focus has not changed its core outlook following the correction. The firm expects gold prices to average $5,500 an ounce by mid-year and around $5,800 an ounce for the full year.
While some banks have floated bullish scenarios of $6,000 to $8,000 gold, Piggott emphasized that the structural drivers — debt, fiscal imbalances, de-dollarization, and geopolitical risk — evolve slowly, not overnight.
“These factors don’t turn on a whim,” he said. “They take years to unwind.”
In Piggott’s view, the recent selloff has strengthened the market rather than weakened it.
“This correction was well-deserved and well-needed,” he said. “It resets sentiment, brings buyers back in, and gives the market a stronger foundation.”
As long as uncertainty remains elevated — and confidence in fiscal discipline remains fragile — gold’s long-term trajectory remains intact.
“Volatility is uncomfortable,” Piggott said. “But in this market, it’s not a warning sign. It’s the cost of repricing risk.”
