Gold was once considered a "basement" whenever the market fluctuated, but this role is being clearly eroded. Even, the precious metal is now showing signs of moving as a highly sensitive, amplified asset instead of easing market shocks, according to Robin Brooks - senior expert at the Brookings Institution, former Chief Economist of the IIF and Goldman Sachs foreign exchange strategist.
In a new analysis, he believes that there are significant changes in the movement of the gold market.
Gold was originally considered a shelter when other assets fell sharply. But that was no longer true in the past six weeks of conflict. Gold prices fell by about 10%, while the S&P 500 index fell less than 1%. If it falls even more sharply than the S&P 500 in a major shock, then gold is no longer a risk hedging tool, but is showing the opposite," he said.
According to Mr. Brooks, gold is currently moving like a highly volatile asset, that is, tending to increase sharply when the market is favorable but also decrease more sharply when the market goes down.
He put forward several hypotheses to explain this development. The first hypothesis suggests that central banks in emerging economies have sold gold reserves in recent volatility. However, according to him, this mainly occurred in Turkey – where gold reserves fell by about 128 tons to mobilize foreign exchange to protect the domestic currency.
He believes that Turkey is an exception, because maintaining a stable exchange rate with the USD forces the central bank of this country to sell reserves in market shocks – a way that many other emerging economies have long given up on.
The second hypothesis relates to the sharp increase in gold in the past year, when many investors bought gold to hedge against currency devaluation risks. According to Mr. Brooks, this wave of price increases has attracted many new investors to participate in the market, but this group of investors tends to withdraw capital quickly when volatility appears.
If that's really the case and I think the probability is high, then just need more time for this group of investors to withdraw from the market, gold will return to its familiar shelter role before," he said.
According to Mr. Brooks, the safe-haven role of gold is not completely disappearing but is only weakening in the short term.
He also said that the strong increase in gold in the past two years was driven by the combination of geopolitical factors and monetary policy of the US Federal Reserve (Fed).
Specifically, the event on April 2, 2025 contributed to boosting gold prices sharply, but it was not until the Fed Chairman's speech at the Jackson Hole conference on August 22, 2025, that gold prices really broke through clearly.
This speech is considered an important turning point when signaling the start of a monetary easing cycle even though inflation is still high, thereby strongly promoting investment demand in gold.
After that, the interest rate cut on December 10, 2025 continued to create momentum for gold prices to increase sharply. By January 28, 2026, gold prices had nearly doubled compared to a year earlier.
According to Mr. Brooks, the factors driving the upward momentum at that time were reasonable, but in the final stage, market developments became excessive.
When analyzing the recent price drop, he said that the volatility of gold is increasingly trending in the same direction as other risky assets, that is, increasing when the market increases and decreasing when the market decreases.
Although the level of fluctuation in the same direction of gold is still lower than many other precious metals or cryptocurrencies, he believes that this is still not enough to bring peace of mind to investors in the current context.
