2026 Gold Rally Fades; July Tech Selloff Hits Philadelphia Semiconductor Index, Cloud Results Reassure
In January 2026, gold ETFs rose more than 20% at their peak and silver gained as much as 60%, its best month in nearly four decades, before a 36% drawdown. In July, the Philadelphia Semiconductor Index fell 20.66%, erasing about $2.2 trillion, while Korea's KOSPI dropped 22.19% and China's ChiNext and STAR 50 fell 23% and 25.9%. Later, Microsoft, Amazon, Alphabet and Meta reported strong cloud growth and higher capital expenditure, with Amazon AWS revenue up 37% and Alphabet's Google Cloud up 82%.
Global asset prices have been highly volatile since the start of 2026. In January, gold ETFs rose more than 20% at their monthly peak, and silver gained as much as 60% in a single month, its best performance in nearly four decades. Silver then fell from a high of $121.64 on January 29 to an intraday low of $77.72 on January 30, a maximum drawdown of about 36%, the largest single-day drop on record.
Technology led major global indices in the first half. Markets with high semiconductor weightings, including South Korea, Taiwan, Japan and the Philadelphia Semiconductor Index, outperformed. On China's ChiNext, optical modules and PCB names rose sharply, while equipment and foundry segments on the STAR 50 also gained significantly.
The market turned sharply lower in July. The Philadelphia Semiconductor Index tumbled 20.66%, South Korea's KOSPI fell 22.19%, and the ChiNext and STAR 50 dropped 23.00% and 25.90%, respectively. The Philadelphia Semiconductor Index saw intraday swings of at least 2% on each of 22 trading days, fell about 21% for the month, and lost about $2.2 trillion in market value, with 60-day historical volatility rising to about 66%. The STAR 50 posted its largest monthly decline since its launch, while the ChiNext's monthly drop was the second-largest on record.
The volatility stemmed from multiple factors: concerns over cloud capital expenditure, dollar exchange-rate pressure, and concentrated deleveraging of leveraged ETFs in South Korea. In July, the number of 2x leveraged long ETF products in the Korean market at one point increased to 13, after which purchase thresholds were raised and total assets shrank significantly.
Several factors have since eased. The US PCE price index rose 5.1% annualized in June, and core PCE rose 3.4%. Microsoft, Alphabet, Amazon and Meta subsequently reported earnings. Amazon's AWS revenue grew 37% to $42.2 billion, the fastest growth in 18 quarters, with operating profit of $16.6 billion, and the company raised its full-year capital expenditure plan to about $220 billion. Alphabet's second-quarter Google Cloud revenue was $24.8 billion, up 82% year over year, with cloud operating profit of $8.8 billion and quarterly capital expenditure of $44.9 billion; its 2026 capital expenditure guidance was raised to $195 billion to $205 billion. The growth in cloud revenue and profit shows that AI investment can generate returns, but the heavy spending pushed some companies' quarterly free cash flow negative.
Prime brokerage data showed that in the week ended July 30, hedge funds' net buying of US technology stocks was the highest since December 2022 and the third-largest weekly buying volume in at least five years, with net purchases of the Magnificent Seven for four consecutive trading days. In July, the Hang Seng Index and Hang Seng Tech led global gains. Hong Kong-listed AI names are mainly cloud vendors and AI applications, while A-shares are mainly AI hardware.