Gold falls 26% from January peak, silver deficit persists: How should mutual fund investors respond?

Gold has corrected 26% from its January peak, raising questions for ETF investors. Strong central-bank demand, stabilising ETF flows, and geopolitical and fiscal risks continue to support gold, while silver faces a supply deficit. Here’s what investors should know before adding exposure.

Investors who stayed on the sidelines during gold’s sharp rally may now have a reason to look at a different entry point. But has the correction changed the investment case for gold ETFs?

According to Tata Mutual Fund’s October 2026 report, gold prices have corrected about 26% from their January 2026 peak, falling from around $5,595 an ounce to about $4,138.

The recent decline has been driven largely by higher US Treasury yields and a stronger US dollar, rather than a deterioration in gold’s structural fundamentals.

Here's what investors considering gold and silver ETFs should know and how they can approach the correction.

What is supporting gold despite the correction?

Tata Mutual Fund said higher US Treasury yields and a stronger US dollar have been the key recent headwinds for gold. “Despite substantial ETF outflows in 2022–23, gold prices remained resilient, supported by strong central bank purchases that effectively established a structural demand floor.”

Central banks purchased 289 tonnes of gold in the second quarter of 2026, while full-year purchases are estimated at 700–900 tonnes, above the pre-2022 annual average of around 400–500 tonnes.

Reserve diversification away from US-dollar assets, particularly by China and emerging-market central banks, remains an important source of demand.

Are gold ETF inflows lagging?

For gold ETF investors, the flow trend is particularly important. Tata Mutual Fund said investment demand had rebounded sharply in 2025, with ETF inflows rising significantly while central bank buying remained strong. The combination helped push total gold demand to a key milestone.