Gold's 'Healthy Liquidation': Wall Street Eyes $6,000 Despite Crash

The gold market has endured a historic volatility stress test in early 2026, plunging from a record peak of $5,600 to test support below $4,500. While the magnitude of the drop sparked fears of a bubble burst, major financial institutions including UBS, Deutsche Bank, and Barclays argue this is a necessary technical correction within a secular bull market.

The 'Chinese Floor'

A critical new dynamic preventing a deeper rout is the unprecedented demand from China. According to Deutsche Bank, Chinese investors are actively sweeping up supply, with buying intensity estimated at three times the rate of 2025.

• ETF Inflows: In January alone, Chinese Gold ETFs added 940,000 ounces. Annualized, this puts China on track for 11.5 million ounces of accumulation in 2026.
• Retail Shift: With local property and equity markets underperforming, Chinese capital is rotating aggressively into hard assets, creating a “dip-buying” culture that differs from the price-sensitive jewelry market of the past.

Macro Thesis Unchanged

Wall Street strategists emphasize that the drivers propelling gold—fiscal dominance and geopolitical hedging—remain intact.

• Barclays: Notes that gold is simply returning to its “fair value” deviation after an exuberant rally. They argue that in a “fiscal dominance” regime (high US debt/GDP), gold remains the primary hedge against fiat debasement.
• UBS: Views $4,500 as a robust technical support level, predicting prices will reclaim highs over the coming quarters as the real yield correlation continues to break down.

Technical Outlook

Metals Focus analysts suggest the “FOMO” (Fear Of Missing Out) trade is likely to reignite once stability returns. The correction has cleansed speculative long positions, likely setting the stage for a march toward the $6,000 psychological target as investors position for long-term US dollar debasement.