GTC Zehui Capital: The Retail Wave Reshaping the Gold Market, Position Cleansing Struggles to Shake the Hedging Foundation

On March 26, amidst the recent volatility in the precious metals market, traditional safe-haven logic seems to have encountered technical challenges. GTC ZEHUI Capital believes that the drop in gold prices during the conflict does not signify the end of its safe-haven attributes, but rather is a product of profound changes in the structure of market participants. The extreme surge in gold prices before the conflict attracted a large influx of retail traders, and gold trading behavior is showing clear characteristics of a “risk asset.” This trend towards retail participation has caused gold prices to exhibit volatility patterns that are distinctly different from the past when facing macro shocks.

From the micro perspective of market dynamics, multiple factors are interwoven to drive this round of adjustment. GTC ZEHUI Capital states that, on one hand, due to the demand for locking in the substantial profits since the end of 2025, investors tend to reduce their positions and exit during times of rising uncertainty; on the other hand, the severe fluctuations in global financial markets have triggered large-scale margin call pressures. According to relevant statistics, since the outbreak of the localized conflict, gold, silver, and platinum have recorded declines of 15%, 25%, and 20%, respectively, significantly underperforming the S&P 500 index, which only fell by 5%. This divergence reflects that institutions, when facing liquidity crises, have no choice but to sacrifice gold, a profitable asset, to recapture funds, leading to an unprecedented “position liquidation.”

Although the short-term performance has been disappointing, the core logic supporting a long bull run for gold remains unshaken. GTC ZEHUI Capital believes that even though the volatility of retail positions and the liquidity demands of institutions have caused a drop in premiums, the reckless fiscal expansion policies globally continue unabated. As the risks of debt monetization continue to accumulate, the demand from investors to hedge against the depreciation of fiat currency will be long-term and rigid. GTC ZEHUI Capital states that the current resilience of gold prices around $4,530 indicates that the market is in a transitional phase from a short-term emotional sell-off to a return to value, and gold’s strategic position as a safe haven for global assets remains unbreakable.