In well-buffered modern soils, higher annual rainfall is associated with enhanced soil ferrimagnetic mineral content, especially of ultrafine particles that result in distinctive observable rock magnetic properties. Hence, paleosol magnetism has been widely used as a paleoprecipitation proxy. Identifying the dominant mechanism(s) of magnetic enhancement in a given sample is critical for reliable inference of paleoprecipitation. Here we use high-resolution magnetic field and electron microscopy to identify the grain-scale setting and formation pathway of magnetic enhancement in two modern soils developed in higher (~580 mm/y) and lower (~190 mm/y) precipitation settings from the Qilianshan Range, China. We find both soils contain 1-30 µm aeolian Fe-oxide grains with indistinguishable rock magnetic properties while the higher-precipitation soil contains an additional population of ultrafine (<150 nm), magnetically distinct magnetite grains. We show that the in situ precipitation of these ultrafine particles, likely during wet-dry cycling, is the only significant magnetic enhancement mechanism in this soil. These results demonstrate the potential for quantum diamond microscope (QDM) magnetic microscopy to extract magnetic information from distinct, even intimately mixed, grain populations. This information can be used to evaluate the contribution of distinct enhancement mechanisms to the total magnetization.