Gold declines as trading volumes remain subdued due to holidays in China

Gold declines as trading volumes remain subdued due to holidays in China

Gold Prices Dip as Holiday-Driven Trading Subsides in China

Gold prices declined on February 16, 2026, as subdued trading volumes persisted due to China's Lunar New Year holiday closure and a stronger U.S. dollar according to BullionVault. Spot gold fell as much as 1.5% to $4,967 per troy ounce before partially recovering by midday, while U.S. gold futures dropped 1.6% to $4,966.80. The pullback followed a record-high weekly close for gold, driven by optimism over potential Federal Reserve rate cuts and a year-long rally in prices according to BullionVault.

China, a critical driver of global gold demand, remained closed through February 23 for the Lunar New Year, limiting immediate upside momentum. The Shanghai Gold Exchange (SGE) and Shanghai Futures Exchange (SHFE) reported reduced activity, with SGE trading volumes hitting a five-month low and SHFE volumes falling to their lowest weekly average since mid-January. Tightened trading conditions, including raised margin requirements (up to 27% on the SGE), further curbed speculative activity.

Meanwhile, speculative positioning in U.S. gold futures continued to moderate. Hedge funds and leveraged speculators reduced their net long position in Comex gold to 289 tonnes—a three-month low and 33.3% below the one-year average. Despite this, the value of net long positions rose slightly to $46 billion, remaining below the January peak of $66 billion.

Chinese gold ETFs, however, remained resilient. They added RMB44 billion ($6.2 billion) in January, pushing assets under management to a record RMB333 billion ($36 billion) and holdings to 286 tonnes. Yet, early February saw temporary outflows as prices dipped below key thresholds before rebounding.

The People's Bank of China (PBoC) continued accumulating gold, increasing holdings by 1.2 tonnes to 2,308 tonnes in January, reflecting central banks' ongoing preference for gold as a hedge against geopolitical and economic uncertainties.

Looking ahead, analysts note that the holiday-driven lull in Chinese markets may prolong price consolidation, though post-holiday demand for jewelry and gifting could provide support. The interplay of reduced liquidity, speculative positioning, and macroeconomic factors will likely shape near-term gold dynamics.

According to BullionVault: BullionVault, Reuters
Reuters: Reuters
World Gold Council: World Gold Council