A warning sign? Asia gold ETF inflows hit record

# Source: Wall Street News

# By Zhao Ying

Asian gold ETFs saw a record net inflow of $7.1 billion in January, with several funds posting all-time high capital inflows. However, this "frenzy" is raising alarm among professional institutions: a retail buying spree is often a sign that the rally has entered an overvalued late stage. Analysts noted that the current gold price trend has shown "non-linear" emotional fluctuations, with extremely dangerous short-term overbought signals.

Asian investors are piling into gold ETFs at a record pace, a phenomenon stoking market fears that the gold price rally is nearing its peak. Elevated retail buying is typically viewed as a warning sign of overvaluation and a late-stage rally for an asset.

According to data compiled by Bloomberg on Friday, precious metal ETFs in Asia recorded a net inflow of $7.1 billion in January, with several funds logging the largest capital inflows in their history. Funds listed in China led the gains, with the Huaan Yi Fu Gold ETF alone attracting $1.9 billion in inflows.

Gold prices have surged recently, climbing more than 20% since early January, despite a pullback on Friday. Market analysts warned that the recent price movement has become rapid, emotional and non-linear, a red flag that the trend has become excessively stretched on a tactical level.

Gold's relative strength index (RSI) has climbed to around 90 – an extremely rare level of extreme overbought (70 is the typical overbought threshold). In its 2026 outlook released last month, the World Gold Council noted that successful policies from the Trump administration would accelerate economic growth, leading to higher interest rates and a stronger US dollar, thereby pushing gold prices lower.

## Chinese Market Drives Capital Inflows

Gold ETFs listed in China attracted substantial capital in January. Besides the $1.9 billion inflow into the Huaan Yi Fu Gold ETF, the ChinaAMC Gold ETF drew $420 million and the GF Shanghai Gold ETF raked in $191.4 million, both hitting historical records.

Silver-focused ETFs have also been in high demand. South Korea's Samsung KODEX Silver Futures ETF posted a record net inflow of $231.6 million in January.

China's only pure silver fund – the SDIC UBS Silver Futures Fund LOF – suspended subscriptions on Wednesday and was halted from trading on Friday. Earlier massive capital inflows had caused the fund to trade at a significant premium to its underlying assets, underscoring the fervor of market demand.

## Professional Investors Sound Cautionary Notes

"We have been a major bull on gold during this cycle," said Nick Ferres, Chief Investment Officer at Singapore-based Vantage Point Asset Management, which has bought both gold mining stocks and ETFs. "However, the recent price action has become rapid, emotional and non-linear, a warning sign that the trend is excessively extended on a tactical basis."

Gold's sharp rally has been underpinned by heavy central bank purchases and inflows into gold ETFs. According to the World Gold Council, total holdings in gold-backed funds rose every month last year except May. Precious metals have also benefited from the unpredictability of US policy-making and dollar outflows driven by growing US isolationism.

## New Products Launched to Meet Demand

Asset managers are gearing up to launch new products to cope with surging demand for gold ETFs, according to Bloomberg Intelligence.

"ETF issuers are likely to meet safe-haven demand by rolling out more gold-related funds," analysts Rebecca Sin and Michelle Leung wrote in a research note. "Hong Kong offers a variety of tools from low-cost physical trackers to leveraged futures and mining equities, with two new funds listing this week as the city seeks to solidify its position as a gold trading hub."

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