By: Rhona O'Connell, Head of Market Analysis
As of early 2026, gold prices are being shaped as much by market stress and cash needs as by geopolitical risk. Recent price action shows that gold can fall even when broader fear is rising, particularly when investors need to raise liquidity quickly. That shift matters because it challenges the usual assumption that gold will always move higher during periods of market turmoil. In this phase of the precious metals cycle, positioning, sentiment and cross-asset stress are proving just as important as the traditional safe haven narrative.
Rhona O'Connell, StoneX Head of Market Analysis, EMEA and Asia, has tracked precious metals markets through repeated cycles of investor repositioning, official sector demand, and risk-driven volatility. Her perspective is particularly relevant to current gold price behavior because she connects physical demand, investor flows, and central bank activity in a way that explains why gold can weaken even when uncertainty remains elevated.
Gold price weakness is increasingly being driven by liquidity pressure rather than by a fading risk backdrop. Rhona O'Connell describes the market as "bought overcrowded, overplayed", then explains that as equity markets deteriorated, gold was "being cashed in in order to raise liquidity against possible distress". That matters because gold is still performing a defensive role, but it is doing so by providing immediate funding rather than by simply rising in value. Consequently, gold investors should read the recent decline as evidence of forced cash generation and positioning stress, not necessarily as proof that safe haven demand has disappeared.
Gold ETF liquidation is reinforcing the shift from bullish conviction to more cautious positioning. O'Connell notes that the market has seen "pretty steady liquidation" and adds that "we lost 63 tonnes, I think it was in March", which she says tells investors something important about sentiment. Gold ETF outflows matter because they can both reflect and accelerate market weakness when conditions are volatile, resulting in a feedback loop between price declines and investor caution. Specifically, gold prices become more vulnerable when institutional holders are reducing exposure at the same time that retail and professional investors are reassessing the durability of the rally.
Central bank gold buying remains important, but its ability to underpin prices appears less reliable than it was over the past four years. O'Connell says official buyers were "big net buyers" over that period, totaling "something like 3700 tonnes", yet she also notes that the World Gold Council reported just "a net five tonnes purchases in January" versus much stronger prior monthly averages. That slowdown matters because official sector demand has been one of the clearest structural supports for gold, both by removing physical supply and by sending a broader risk signal to the market. If central banks become less aggressive at higher prices, gold loses part of the steady underlying demand base that helped sustain the earlier rally.
Rhona O'Connell argues that gold did behave like a defensive asset, but through liquidity mechanics rather than a straight rally. Investors sold gold to raise cash as broader market stress intensified.
They suggest investor sentiment has weakened during the recent pullback. O'Connell points to roughly 63 tonnes of liquidation in March as a meaningful signal of caution.
They remain important long-term buyers, but the pace of purchases has slowed. O'Connell highlights a sharp drop to net five tonnes in January, raising doubts about whether official demand is as strong as before.
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--- Written by Frédéric Guétin, StoneX TV Producer
--- Expert: Rhona O'Connell, StoneX Head of Market Analysis, EMEA and Asia
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