Gold’s transition into a high-volatility regime marks a structural break in how the metal functions within global portfolios. According to analysts at Heraeus, gold is no longer behaving as a defensive asset but increasingly resembles a speculative instrument, driven by leveraged positioning and momentum trading. The sharp rally of recent years, during which gold prices increased fivefold despite a largely unchanged U.S. dollar index, laid the groundwork for instability rather than safety.
As prices declined, margin calls and stop-loss triggers accelerated sell-offs, reinforcing volatility. Exchanges raising margin requirements further tightened liquidity, amplifying price swings. This environment challenges traditional portfolio models that rely on gold as a volatility dampener. Instead of acting as insurance, gold is now contributing to overall risk, forcing institutional investors to rethink hedging strategies.

The implication is clear: gold allocations may need to be actively managed rather than passively held, as the metal’s role shifts from capital preservation to tactical trading asset.
Source: https://www.kitco.com/news/article/2026-02-09/gold-and-silver-enter-new-high-volatility-regime-heraeus