The precious metal is now down 0.8% today, ending four consecutive days of losses and currently at $4,011. This comes as we see some more signs of debt reduction in the markets, some of which point to the Fed easing its rate cut bets. While this may be true as Fed funds futures are now priced at only ~42% of the December move, this is only part of the story.
Gold (XAU/USD) 4-hour chart
As coincidental as it is, gold has become one of the more greedy investments in 2025. I will be the first to admit that I myself have on more than one occasion advocated buying gold on dips when trying to mop up excess liquidity. There is a reasonable logic to doing so He Good.
At a time when markets are operating so cautiously, gold has doubled up as a great hedge against slow global growth, political uncertainty and geopolitical tensions.
But one could argue that from a technical perspective there are also signs of gold falling short. The failure of the double-top pattern around $4,368 was the first signal before a push above $4,200 last week. And he’s making a little flag pattern in gold, one of the first in a long time.
The $4,000 mark will be important not only in that regard, but also from a psychological perspective. As the risk appetite deepens, I would ultimately argue that if the fear level goes up a few notches it will translate into a bid for gold.
For now, this seems like a classic case of broader markets calling for some deleveraging and a correction. The overall risk background has not yet come under heavy scrutiny and response.
But at a time when there are signs and suggestions that perhaps the scenario is changing, it is advisable to exercise some caution rather than diving in with both feet.
I mean, look at what’s currently happening with Bitcoin and the entire MSTR process, then there’s growing doubt over Nvidia’s future as well with big names selling their entire stakes in the firm in the last quarter. There is certainly some nervousness in the markets. So, just keep that in mind.
I have been happy with gold’s decline before, but not with this latest fall in the last week. If the shoe drops, I think we’ll have to wait for the tide to change from “deleveraging/panic selling” to “extreme fear” before gold starts to make a comeback.
