Royal Bank of Canada’s Duan Nairong: Gold trading volatility will continue; consider building positions below 4400

Ask AI · The main driver of gold price volatility is liquidity, not geopolitical risk—what’s the logic behind it?

Nanfang Finance 21st Century Economic Report reporter Yuan Sijie intern Zhang Boyang Hong Kong coverage

From “geopolitical hedging” to “liquidity trading,” the international precious metals market is showing a more complex pricing shift.

In Q1 2026, gold and silver prices saw notable volatility. On March 31, the international gold price returned to around $4,538 per ounce, while the silver price was about $69.35 per ounce, but it retreated materially from the recent month’s highs. Data show that over the past month, the declines in gold and silver futures were approximately 13% and 24%, respectively, indicating that risk-hedging sentiment did not translate into gains in a linear way. Instead, it was amplified by a stronger U.S. dollar, rising rate expectations, and increased liquidation by trading funds. The World Gold Council also noted that the pressure on gold prices to pull back since March comes from the U.S. dollar and higher U.S. Treasury yields, as well as outflows from U.S.-listed gold ETFs.

The recent volatile price action in the precious metals market has put the traditional “safe-haven asset” logic to the test. Bloomberg Industry Research data show that since March, commodity ETFs have experienced a record $11 billion outflow in total, including more than $7 billion in gold ETF redemptions and about $1.4 billion in silver ETF outflows.

Against this backdrop, segment乃榕, Senior Strategy Specialist for Asia at RBC Wealth Management, spoke with reporters from 21st Century Economic Report in an in-depth interview, offering a deep analysis of the core logic behind this round of gold price fluctuations. She said the biggest driver is not geopolitical risk itself, but the impact of liquidity.

Duan Nai Rong said that since the second half of last year, speculative and leveraged funds that poured in have been concentratedly exiting, and this has been compounded by some Asian investors selling gold to plug liquidity gaps—together amplifying the recent turbulence in the gold market. The data showing that trading volume for gold ETFs surged 3 times in the first two months of 2026 compared with the 2025 average, and silver ETFs surged 9 times, is an “example of crowded trading.”

Looking ahead, the long-term base for gold still has support from central bank gold purchases. According to statistics from the World Gold Council, in 2025, global central banks net bought 863 tons of gold. Duan Nai Rong believes that amid the de-dollarization wave, central banks in emerging markets such as Poland and China continue to add to holdings, providing long-term support for gold prices.

For the timing that investors care about most, Duan Nai Rong provided a clear range forecast: gold around $4,200–$4,400 per ounce offers a relatively high margin of safety, while around $4,900 it may face resistance. She also noted that this year, the gold market is more likely to exhibit characteristics of range-bound, wave-like trading.

Speculative capital intensifies volatility in gold and silver prices

《21st Century》：Against the backdrop of ongoing turmoil in the Middle East, what factors have caused the massive swings in gold and silver prices recently? Will this kind of volatility continue through the year?

**Duan Nai Rong：**We believe the biggest driver behind the recent precious metals price volatility is the impact of liquidity. On one hand, there has been a rapid exit of speculative and leveraged funds. From the second half of last year to the start of this year, gold and silver prices rose dramatically and broke through long-term trend lines—suggesting that there is a large amount of speculative and leveraged capital in the market. When geopolitical risks rise locally, such as the turmoil in the Middle East, these funds tend to withdraw quickly, leading to sharp price fluctuations.

On the other hand, some investors face urgent liquidity needs and a demand to hold more cash. Amid uncertainty about the Middle East situation, some investors may need to sell gold and silver to increase cash holdings or to fill liquidity gaps elsewhere; such selling behavior also amplifies price volatility in the short term.

As for whether this volatility will persist through the year, it depends largely on how the Middle East situation develops further. However, at least at the current stage, market volatility has temporarily stabilized.

《21st Century》：Currently, there are market voices questioning whether gold is still an effective safe-haven asset. Others argue that after earlier large allocations to gold ETFs, gold has become a risk asset. How do you view these discussions?

**Duan Nai Rong：**We believe that in this Middle East conflict, gold appears to have lost its safe-haven asset role. The most fundamental reason is that since late last year, a large amount of speculative capital has participated in the game, leading to situations in which many speculative funds and leveraged funds have been exiting.

Looking at the trading of gold and silver ETFs, in just the last two months, the trading volume of gold and silver ETFs has surged sharply compared with last year’s average level. Gold ETF trading volume increased by about 3 times, while silver ETF trading volume increased by about 9 times. This shows that the market is filled with many short-term speculators and leveraged capital. When changes occur in the local geopolitical situation, these funds’ concentrated exits cause dramatic swings in price, thereby masking gold’s original safe-haven characteristics.

In addition, during the recent fluctuations in gold prices, we have observed a clear time-related pattern: gold often experiences sharp declines during the Asian trading session, and after European funds enter, the magnitude of the declines tends to stabilize and the price becomes relatively steady. We speculate that this may be driven by some Asian investors’ demand to add cash or to fill other liquidity gaps, leading them to reduce positions or sell gold during the Asian session. This regionally concentrated selling pressure also drives a large short-term drop in gold prices.

Higher enthusiasm among Asian retail investors for gold ETF buying

《21st Century》：Recently, volatility in the precious metals market has been intense, and capital flows are undoubtedly the key driver. Based on your observation, what types of investors are buying, and which are selling? Also, behind different countries’ investors increasing or reducing holdings, are there specific driving factors?

**Duan Nai Rong：**Gold trading data has always had some degree of opacity and lag, making it difficult to obtain comprehensive and timely information, because it involves not only ETF trading volume but also central banks’ buying behavior.

At present, we mainly analyze based on gold ETF trading data. Looking at the trading data from the most recent two weeks, the market shows a clear regional divergence. Chinese investors are still continuing to buy gold ETFs, while investors in Europe and the U.S. are relatively more inclined to reduce holdings. In addition, some products linked to gold ETFs have also seen forced selling when they hit key price levels.

In our view, over the past one or two years, Asian retail investors have been more enthusiastic about participating in gold ETF purchases. This is very likely because, in many Asian countries over the past one or two years, currencies have depreciated relative to the U.S. dollar, prompting investors to seek value-preserving assets. Over the past two or three years, the U.S. experienced a bull market in technology stocks. For Asian investors, besides investing in U.S. tech stocks, gold became a relatively good alternative. Moreover, at that time, many Asian countries generally had low real interest rates, leaving investors with a lack of high-quality investment targets; compared with that, gold became an ideal place to store capital.

Central bank gold purchases provide long-term support for gold prices

《21st Century》：How might the Federal Reserve’s interest rate policy affect spot gold and silver prices?

**Duan Nai Rong：**From a historical perspective, factors such as real interest rates, the U.S. dollar trend, the inflation trend, and geopolitical risks do affect precious metals prices to a certain extent. However, at the current stage, during this wave of gold’s rise, the impact of the dollar’s real interest rate trend on gold prices appears to be less significant than in the past.

Over the past two to three years, U.S. 10-year Treasury yields have generally stayed relatively stable, yet gold prices have risen sharply. We believe the reason for this divergence is that global central banks have become the largest marginal buyer in this gold rally. In the past, central banks held large amounts of Treasuries. With their relatively good credit risk profile and liquidity, those holdings can be exchanged for required commodities such as oil and food. After the outbreak of the Russia-Ukraine conflict in 2022, this advantage of Treasuries has been challenged. Central banks realized that the traditional credit assets they hold, such as Treasuries, face the risk of being frozen or seized. As a result, central banks began shifting toward holding gold.

So far, this trend has not changed. Especially this year, in just the past three months alone, the U.S. has carried out two military actions, which makes the demand for emerging market central banks to increase gold holdings even more urgent. For example, last year the largest buyer of gold was Poland, which may reflect that it felt certain pressure in the Russia-Ukraine conflict and needed to substantially increase its gold holdings.

In addition, even though many emerging market countries have increased gold holdings in large amounts over the past two to three years, the ratio of gold holdings to total foreign exchange reserves remains relatively low. Many Asian countries, including China, Japan, and Singapore, all have this ratio below 10%, which still leaves substantial room for further accumulation.

《21st Century》：How will gold and silver prices perform in both the short term and long term this year? What factors will influence their trajectory?

**Duan Nai Rong：**In the short term, we believe the most important factor is the further development of the Middle East conflict, which will affect both investor confidence and the direction of capital flows.

Over the long term, the factors influencing gold and silver prices differ. For gold, investors place more emphasis on its safe-haven demand. In a de-dollarization environment and a world trending toward multipolarity, gold has its unique position. In addition, central bank gold purchasing will continue in the long run, which will provide long-term support for gold prices.

Silver’s pricing logic is different. Its industrial demand is stronger. In many industrial fields, such as photovoltaic solar energy, electric vehicles, and medical devices, large amounts of silver are used. Moreover, compared with gold, the silver market is smaller in size, so its cyclical behavior and price volatility are stronger. If you want silver to move into a sustained strong long-term trend, the key is whether the economy can achieve steady and strong recovery, thereby boosting its industrial demand.

Building positions below $4,400 is relatively safer

《21st Century》：For investors who want to use a “buy the dip” strategy, what conditions should be met in terms of technical patterns or market sentiment to be considered to have a high margin of safety? What key indicators should investors observe to judge the short-term走势 of gold and silver?

**Duan Nai Rong：**For investors who want to build positions on dips, we recommend focusing on technical indicators such as moving averages (for example, the 50-day and 200-day moving averages), as well as key price support and resistance levels.

For gold, around $4,200 to $4,400 may be a good building position range. Given the overall situation this year, investors need to adjust expectations: the returns of the gold market in 2026 may not be as good as last year, and it will more likely show characteristics of wave-like, range-bound trading. When the gold price rises to around $4,900, it may encounter a resistance level. For investors who currently have no position, building positions below $4,400 is relatively safer.

For gold, our target price in the capital markets is around $5,000. This year, we believe that most of the time the gold trading range may be between $4,500 and $5,500.

For silver, we observe short-term price support around $60, while this year silver prices may face resistance around $75 and $86.

Planning: Zhao Haijian

Reporter: Yuan Sijie

Supervisor: Zhu Lina

Edited by: Hejia Li Yingliang

Design: Li Jili

Produced by: Nanfang Finance All-Media Group