Gold exchange-traded funds corrected sharply by up to 21% on Thursday, even as spot gold saw a relatively modest decline, driven largely by profit-booking and unwinding of speculative positions.
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Gold exchange-traded funds witnessed sharp corrections of up to 21 per cent on Thursday, even as spot prices corrected modestly, in what analysts attributed to profit-booking and unwinding of speculative positions following a strong rally to record highs.
The sell-off came after US President Donald Trump eased geopolitical tensions by ruling out military action to acquire Greenland during his appearance at the World Economic Forum in Davos. Trump said Washington and NATO had formed “the framework of a future deal with respect to Greenland, and in fact, the entire Arctic Region,” removing immediate safe-haven demand that had pushed gold above $4,880 per ounce earlier this week.
Investor strategy
“The move appears driven more by sentiment and liquidity than fundamentals,” said Aditya Agrawal, Chief Investment Officer at Avisa Wealth Creators. “Long-term investors may consider staggered allocation within asset allocation limits, while short-term traders should remain cautious amid continued volatility.”
COMEX gold settled around $4,832 after hitting a record $4,888, while MCX gold retraced nearly 7 per cent from its all-time high levels. The 10-year US Treasury yield fell 4 basis points to 4.26 per cent as haven demand eased.
NS Ramaswamy, Head of Commodity at Ventura, maintained a positive long-term outlook. “Gold enters 2026 with strong momentum and approaching a critical long-term inflection point,” he said. “Pull backs from overbought levels are allocation opportunities.” He cited supportive monetary policy, elevated safe-haven demand, significant ETF inflows and weaker dollar as central banks diversify away from US assets.
Technical Levels
Technical analysts see key support levels holding firm. “As long as prices hold above $4,750, the upside target of $5,000 remains intact,” said Renisha Chainani, Head of Research at Augmont. The previous resistance near $4,750 has now turned into strong support, she noted.
However, Aamir Makda of Choice Broking pointed to warning signs. “We have observed an RSI divergence on Daily chart, which is a classic ‘Red flag’,” he said, noting that open interest levels showed long unwinding by traders with no new additions in long positions.
Structural Bull Case
The correction comes despite structural drivers remaining intact. Anand Rathi Research noted that central banks have bought 800-1,000 tonnes of gold annually since 2022, taking gold’s share of official reserves to 15-18 per cent, the highest in decades. “The Economic Policy Uncertainty Index is now 3-4 times higher than pre-2008 averages, reflecting persistent geopolitical and policy risk,” the research team said.
Rahul Kalantri of Mehta Equities identified support at $4,730-$4,665 and resistance at $4,840-$4,900. “Uncertainty surrounding US trade tariffs and the prevailing ‘sell America’ narrative continue to underpin safe-haven demand, while rupee weakness is supporting domestic bullion prices,” he said.
Ponmudi R, CEO of Enrich Money, maintained his bullish stance despite the correction. “The current dip reflects healthy profit-booking amid easing tariff fears, but the broader uptrend remains powerful,” he said. “A sustained breakout above $4,850-$4,900 could open the path toward $5,000-$5,200 in the near term.”
Axis Securities noted that the broader trend remains positive with the medium-term outlook intact as long as prices sustain above $4,600.
Published on January 22, 2026
