Why did gold prices fall even as global uncertainty stayed high?
Gold prices fell because investors sold bullion to raise cash during extreme market stress, not because gold lost its safe-haven role. According to Suki Cooper, Global Head of Commodities Research at Standard Chartered Bank, gold remained useful precisely because it was liquid and easy to sell when investors needed funds fast.The selloff unfolded even as the U.S.-Israel war with Iran disrupted global supply chains and shook wider financial markets. That backdrop would normally support safe-haven demand for precious metals, but in periods of intense stress, investors often sell gold first to meet margin calls or fund asset rotation.
Cooper told CNBC that the size and liquidity of the gold market make it one of the easiest places for investors to raise cash during economic uncertainty. That point is critical for understanding recent XAUUSD weakness.
She said, "While selling gold tends to be a preferred way to meet liquidity needs amid margin calls or asset rotation at times of extreme distress, the pace of the sell-off has been sharper than expected. Liquidity needs could keep gold under pressure for four to six weeks, based on historical trends."
For Indian investors, a weaker international gold price does not automatically mean safe-haven demand has collapsed. In many cases, it reflects forced selling in global markets, which can temporarily drag down bullion and XAUUSD before conditions stabilize.
What is Standard Chartered saying about gold's safe-haven role?
Standard Chartered says gold still acted as a safe-haven asset because it provided liquidity when investors needed cash most. In Cooper's view, that function is part of gold's defensive value, even if prices fall in the short term.Investors may be frustrated because gold had just ended its longest consecutive losing streak in history. But Cooper argued that the recent weakness should not be read simply as a bearish signal for bullion.
She said gold continued to do its job throughout the decline. Instead of failing as a haven, gold served as an asset investors could convert into cash quickly during a period of deep market stress.
The broader macro backdrop still supports gold over time. Cooper said the conflict involving the United States, Israel, and Iran created major global supply chain problems, while turmoil in the Middle East pushed energy prices higher and revived inflation fears.
That mix matters for precious metals because gold often performs well when inflation rises unexpectedly and when investors seek a store of value during geopolitical instability. Safe-haven demand can therefore remain intact even during a sharp correction.
For India, higher global energy prices can feed imported inflation and pressure the rupee through the oil trade balance. If crude oil remains elevated and inflation concerns build, domestic gold prices in INR may stay supported even when international spot gold remains volatile.
Where are the key gold price support levels right now?
Gold has found initial support at its 200-day moving average, but Standard Chartered says the market is still searching for a durable bottom. Cooper said technical stabilization may have started, yet firmer support may require more liquidation before a stronger rebound can develop.This week, gold bounced from support at $4,100 per ounce. Spot gold was last trading at $4,577.50 a troy ounce, up nearly 3% on the day.
Those levels matter because they suggest buyers are stepping back into the market after a severe selloff. Even so, Cooper cautioned that the bottoming process is not yet complete.
For Indian bullion buyers and investors, global support zones often shape landed import costs and local pricing trends. If XAUUSD stays above major chart support while the rupee weakens, domestic gold prices could remain firm relative to the international move.
How does the 200-day moving average matter for gold?
The 200-day moving average matters because traders and institutions treat it as a key long-term trend signal. When gold holds above that level, the market often reads it as evidence that the broader bullish structure is still intact.Cooper's analysis suggests technical support alone may not be enough for a lasting recovery. The market may still need to absorb additional ETF and ETP selling before bullion can establish firmer footing.
How much ETF and ETP gold buying is now under water?
A significant amount of recent exchange-traded product buying is now in loss-making territory, and that creates downside risk if investors liquidate more holdings. Cooper said retail investors were the main source of demand behind gold's run to record highs in January, but many of those positions are now vulnerable.She said, "An analysis of gold ETP flows shows that at least 83t of holdings are in loss-making territory at prices of USD 4,500/oz; this rises to 268t at USD 4,000/oz. Gross inflows of 430t have been added at prices above USD 4,000/oz since January 2025."
That means a meaningful portion of investment demand entered above current or recent trading levels. If gold stays below those entry prices, some investors may sell to cut losses or to raise liquidity.
Cooper added, "Assuming 'last in first out' (LIFO) for ETP buyers, approximately 115t of gold holdings are loss-making and vulnerable to liquidation; this would rise to 357t if prices fell to USD 4,000/oz."
This is a key short-term risk for bullion. If more holders who bought near the highs sell exchange-traded positions, those outflows can intensify downside pressure in gold price action.
Why does ETP liquidation matter for gold prices?
ETP liquidation matters because exchange-traded flows can amplify moves in both directions. When investors rush to exit loss-making positions, selling pressure can accelerate and weigh on spot gold, futures, and wider precious metals sentiment.That is why Cooper believes the market may need more ETF and ETP liquidation before stronger support forms. For Indian investors, this means short-term volatility in global bullion could persist even if the longer-term case for gold as a hedge against inflation, geopolitical risk, and financial stress remains intact.
The next major watchpoint is whether liquidity pressure eases within the four-to-six-week window Cooper highlighted and whether gold can continue to hold above its 200-day moving average and the $4,100 support zone. If liquidation slows while energy-driven inflation risks remain elevated, gold could regain stability, with INR gold prices in India potentially staying resilient if the rupee remains under pressure.
