Gold pulls back as floor debated between $3,400 and $3,800
Gold is correcting from its highs, with the floor debated between $3,400 and $3,800 according to projections circulating on the forum. A strong dollar and interest rates explain the slide.
English · Original discussion in Spanish · Published
Gold corrects as the floor is debated between $3,400 and $3,800
The price of gold has fallen sharply from the highs it reached above $4,600 an ounce, and the question doing the rounds among investors is simple: where does this stop? The most widely cited projection points to a 35% correction from the highs that would take the ounce down to $3,400, a scenario which, according to the calculations circulating, would not be "that bad" within the underlying uptrend. Other analyses settle for seeing the precious metal seeking $3,800, coinciding with a technical support marked by the monthly exponential average.
The trigger for the retreat is not a single news item, but a combination of factors that feed off each other. The strengthening dollar, the prospect of further rate hikes, geopolitical volatility and, above all, forced selling by those who bought gold as a hedge and are now liquidating to cover margins. "Those who bought it to hedge against what's happening are selling it to survive," sums up one analysis circulating insistently. The paradox is that, while the metal falls, stock markets are trading at highs.
The downtrend channel theory and the 65% probability
The starting point of the technical analysis is clear: the chart shows a downtrend channel that has developed over the past two months. The statistical theory the analysts work with suggests that 65% of the time this type of channel breaks upwards. If the other 35% plays out, the price would head to $3,400, a 35% correction from the highs which, they insist, would not be catastrophic. The intermediate alternative involves sideways movement above the support, bouncing at $3,900 and sliding down to $3,700 without breaking the structure.
The reading of the monthly, weekly and daily charts reinforces the bearish orientation. On the daily and weekly timeframes a bearish crossover of exponential moving averages has already occurred, while on the monthly chart only a pullback is visible. It is precisely that long-term chart that attracts the most attention: the price seems headed to test the previous low and, with a high probability, to pierce it slightly down to the $3,800 zone. From there, the question is whether this is just an approach to the average that bounces and resumes the upward path, or the start of a deeper downward move.
The historical precedent cited is the movement of 2013, 2014, 2015 and 2016, when a bearish crossover with similar characteristics ushered in a prolonged period of weakness. The difference is volume: over the past two years it has been high, which complicates the prolonged sideways scenario some were hoping for.
Physical gold holds its ground while derivatives bleed
Here a distinction the analysts themselves stress is worth making: this projection is aimed at trading XauUsd derivatives, not physical gold. In the case of the tangible metal, the thesis that keeps being repeated is that "it's always a good time to buy." The price per gram has moved around 113 euros, with the ounce above 3,500 euros, and the metal has held up like a champion at support levels.
The gap between physical gold and the derivatives that supposedly back it is one of the most interesting offshoots of the debate. Some argue that the rise of the past two years was influenced by those very derivatives affecting the price of the physical metal, and that now the capital outflow from those products is causing the price of the real metal to fall. The logical consequence, if the market tightens due to a shortage of tangible gold or an excessively stratospheric rise in derivatives, is a scenario hard to anticipate.
Why is gold falling when there are wars and geopolitical tension?
The question catches more than one veteran investor off guard. In major wartime crises, tradition says gold rises. Now it's falling. The explanation being worked with has several layers. The first is the dollar: while the US currency strengthens and forecasts point to it continuing to do so, both gold and other metals tend to sink. The second is margin calls: those who bought gold as a hedge are forced to sell it to survive margin calls. The third is rotation into other assets, including the $75 billion mobilised around SpaceX, money that has to come from somewhere and that retail investors obtain by selling gold first, when it should be the last thing liquidated.
On top of that is the uncertainty over rate policy. The coming rate hike is priced in, along with the opportunity cost of holding a yield-less metal. Also Warsh's stance, whose orientation was unknown and who is generating doubts in the market. The pattern repeats itself: once the situation stabilises, gold shoots up. That is the thesis held by the most experienced, with the argument that if someone is selling their gold it's because someone is buying it.
The narrative changes and leaves investors baffled
One of the most commented aspects is the volatility of the story. Only recently the story was that Trump wanted to sink the dollar to boost exports. Now the dollar is strengthening and gold is falling. The narrative adapts to the facts with a flexibility that baffles the retail investor. "I'm amazed at how the narrative changes and catches people off guard," sums up one of the most repeated comments.
In that context, the voices calling for calm and a long-term view gain weight. Gold is $1,500 above where it was two years ago. Those who keep their savings in the metal and avoid swallowing every news item are the ones who win, unlike those who mess around, losing money and time, which is the most valuable thing. The recommendation repeated among those accumulating since 2014 is clear: if it falls, buy; if it rises, hold. And may it fall much further, for those saving in gold and silver.
The correction in gold from its highs has left a map of supports and resistances that shifts every week. $3,800 appears as the most cited reference, with $3,400 as the extreme scenario and $4,300 as the danger zone if it is lost. How much of this fall is technical and how much is the market anticipating something that hasn't peine yet?
The price of gold has fallen sharply from the highs it reached above $4,600 an ounce, and the question doing the rounds among investors is simple: where does this stop? The most widely cited projection points to a 35% correction from the highs that would take the ounce down to $3,400, a scenario which, according to the calculations circulating, would not be "that bad" within the underlying uptrend. Other analyses settle for seeing the precious metal seeking $3,800, coinciding with a technical support marked by the monthly exponential average.
The trigger for the retreat is not a single news item, but a combination of factors that feed off each other. The strengthening dollar, the prospect of further rate hikes, geopolitical volatility and, above all, forced selling by those who bought gold as a hedge and are now liquidating to cover margins. "Those who bought it to hedge against what's happening are selling it to survive," sums up one analysis circulating insistently. The paradox is that, while the metal falls, stock markets are trading at highs.
The downtrend channel theory and the 65% probability
The starting point of the technical analysis is clear: the chart shows a downtrend channel that has developed over the past two months. The statistical theory the analysts work with suggests that 65% of the time this type of channel breaks upwards. If the other 35% plays out, the price would head to $3,400, a 35% correction from the highs which, they insist, would not be catastrophic. The intermediate alternative involves sideways movement above the support, bouncing at $3,900 and sliding down to $3,700 without breaking the structure.
The reading of the monthly, weekly and daily charts reinforces the bearish orientation. On the daily and weekly timeframes a bearish crossover of exponential moving averages has already occurred, while on the monthly chart only a pullback is visible. It is precisely that long-term chart that attracts the most attention: the price seems headed to test the previous low and, with a high probability, to pierce it slightly down to the $3,800 zone. From there, the question is whether this is just an approach to the average that bounces and resumes the upward path, or the start of a deeper downward move.
The historical precedent cited is the movement of 2013, 2014, 2015 and 2016, when a bearish crossover with similar characteristics ushered in a prolonged period of weakness. The difference is volume: over the past two years it has been high, which complicates the prolonged sideways scenario some were hoping for.
Physical gold holds its ground while derivatives bleed
Here a distinction the analysts themselves stress is worth making: this projection is aimed at trading XauUsd derivatives, not physical gold. In the case of the tangible metal, the thesis that keeps being repeated is that "it's always a good time to buy." The price per gram has moved around 113 euros, with the ounce above 3,500 euros, and the metal has held up like a champion at support levels.
The gap between physical gold and the derivatives that supposedly back it is one of the most interesting offshoots of the debate. Some argue that the rise of the past two years was influenced by those very derivatives affecting the price of the physical metal, and that now the capital outflow from those products is causing the price of the real metal to fall. The logical consequence, if the market tightens due to a shortage of tangible gold or an excessively stratospheric rise in derivatives, is a scenario hard to anticipate.
Why is gold falling when there are wars and geopolitical tension?
The question catches more than one veteran investor off guard. In major wartime crises, tradition says gold rises. Now it's falling. The explanation being worked with has several layers. The first is the dollar: while the US currency strengthens and forecasts point to it continuing to do so, both gold and other metals tend to sink. The second is margin calls: those who bought gold as a hedge are forced to sell it to survive margin calls. The third is rotation into other assets, including the $75 billion mobilised around SpaceX, money that has to come from somewhere and that retail investors obtain by selling gold first, when it should be the last thing liquidated.
On top of that is the uncertainty over rate policy. The coming rate hike is priced in, along with the opportunity cost of holding a yield-less metal. Also Warsh's stance, whose orientation was unknown and who is generating doubts in the market. The pattern repeats itself: once the situation stabilises, gold shoots up. That is the thesis held by the most experienced, with the argument that if someone is selling their gold it's because someone is buying it.
The narrative changes and leaves investors baffled
One of the most commented aspects is the volatility of the story. Only recently the story was that Trump wanted to sink the dollar to boost exports. Now the dollar is strengthening and gold is falling. The narrative adapts to the facts with a flexibility that baffles the retail investor. "I'm amazed at how the narrative changes and catches people off guard," sums up one of the most repeated comments.
In that context, the voices calling for calm and a long-term view gain weight. Gold is $1,500 above where it was two years ago. Those who keep their savings in the metal and avoid swallowing every news item are the ones who win, unlike those who mess around, losing money and time, which is the most valuable thing. The recommendation repeated among those accumulating since 2014 is clear: if it falls, buy; if it rises, hold. And may it fall much further, for those saving in gold and silver.
The correction in gold from its highs has left a map of supports and resistances that shifts every week. $3,800 appears as the most cited reference, with $3,400 as the extreme scenario and $4,300 as the danger zone if it is lost. How much of this fall is technical and how much is the market anticipating something that hasn't peine yet?
Also available in: Deutsch
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (66 replies).
More summaries
-
Forum User Spots HCH Pattern in Gold, Targets $4,000
Gold hovering near $4,300. One participant identifies an HCH pattern targeting $4,000, sparking debate over whether to wait for a correction or buy into the dip.
-
Gold holds $4,000 as silver faces 1kg bar shortage
Gold defends $4,000 despite rate hikes while Deutsche Bank predicts a silver surplus by 2027 amid physical stock shortages.
-
Gold and silver: forum users debate if $4,000 is the floor
Forum users discuss gold's drop from $4,100 and 40% premiums on physical silver. 'The notrabajo indicator is powerful,' they joke about...
-
Hotel101 sells rooms in Valdebebas for €208,800
Hotel101 sells rooms in Valdebebas for €208,800 plus VAT with monthly income distribution and doubts about what happens if the operator goes bankrupt
-
Trade Republic shows a loss on a 12.4% gain sale
An investor sold General Mills shares with a 12.4% gain, but Trade Republic showed him a 2.88% loss. The recurring glitch involves foreign currencies.
-
Zurich Cantonal Bank: 100,000 francs to open an account
Zurich's cantonal bank, the world's third-safest, requires 100,000 francs and an in-person trip to open an account for non-residents, according to firsthand accounts.