【越南】How Gold Prices Rebounded After a $1,000 Drop: How to Invest Safely?

At the beginning of 2026, many investors had high hopes for gold as the precious metal was continuously setting new records. The historic peak of $5,595.41 per ounce recorded at the end of January was further fueling optimistic sentiment, leading to a massive influx of capital into the market.
However, at the beginning of February, gold prices unexpectedly experienced a sharp decline, at one point falling to $4,641 per ounce, a drop of nearly $1,000 per ounce from its previous high. This development caused significant volatility in the market and put many investors on alert.
After the sharp decline, buying demand began to increase again, leading to a price recovery. As of 0:00 on February 23 (Vietnam time), the spot gold price was around $5,100 per ounce.
The sharp fluctuations in the short term once again highlight the high-risk nature of the commodity market, while also underscoring the need for effective risk management strategies. For investors, the issue is not just about generating profits, but also about using gold as an effective asset hedge rather than a tool for short-term speculation.
Gold is considered a “safe investment” (Photo: Getty).
In times of volatility, gold is often considered a safe haven investment and attracts large amounts of capital. However, as financial markets, particularly Wall Street, signal positive economic prospects for 2026, asset allocation trends are shifting. A segment of investors is reducing their exposure to precious metals and returning to the stock market – where capital is directly invested in production, business operations, and value creation.

Analysis from Moneywise reveals that the recent decline reflects three fundamental characteristics of the market. First, gold clearly demonstrates its role as a hedge against rising risks. Second, money invested in gold is primarily for asset preservation, not for achieving sudden high profits. And third, assets whose prices surge rapidly due to speculation often experience sharp declines.

Historical data shows that from the 1980s to the present, the stock market has seen long-term growth due to business expansion and profitability, while the price of gold has experienced multiple fluctuations. Unlike stocks or bonds, gold does not generate regular cash flows like dividends or interest rates.
In this context, chasing opportunities driven by the fear of missing out (FOMO) can expose investors to risks when the market reverses. Warren Buffett’s perspective that quality businesses should be held for the long term and that panic selling during market volatility should be avoided is considered a crucial lesson in managing investment psychology, even in the case of assets like gold.

Gold prices had previously surpassed the $5,500 per ounce mark, leading some investors to believe the market was entering a commodity “supercycle” lasting many years. However, many experts are cautious about this assessment.
On Business Insider’s “The Markets” podcast, Lena Thomas, senior commodity analyst at Goldman Sachs, argued that the rise in gold prices does not mean there will be a broad rally across the entire commodity market. According to her, the market should not expect decades of sustained price increases.

According to Thomas’s analysis, the recent sharp rise in gold prices is the result of several factors.
Demand from central banks hedging against geopolitical risks played a significant role, while interest rate cuts by the Federal Reserve reduced the opportunity cost of holding gold, supporting its price.
She also highlighted the “debasement trade” factor – a term referring to concerns about large-scale public debt and weakening fiscal discipline in some Western economies – as a key driver of capital flows into gold.
Furthermore, speculative activity in the options market amplifies the bullish trend. When investors increase their purchases of call options, market makers are forced to buy physical gold to hedge their risk, driving up prices. However, this process can also have the opposite effect when the market declines, potentially pushing prices even lower.
Despite being an asset with limited supply like gold, many industrial metals are severely affected by short-term supply and demand fluctuations. Even silver has seen significant volatility, falling from a high of $121 per ounce at the end of January to around $75.4 per ounce.
According to Goldman Sachs experts, this development reflects the impact of a “liquidity crunch” in London, as trade supply has decreased due to metals being relocated to the US to avoid tariff-related risks.
The recent $1,000 drop in gold prices exposes a harsh reality of commodity investment if you expect large, attractive returns: gold is not a growth investment (Photo: Kitco News).

(Dan Tri Newspaper) – The nearly $1,000 drop in gold prices at the beginning of 2026 is a warning for speculators. Investors need hedging strategies and the power of compound interest to generate sustainable profits, rather than short-term trading.