Gold Finds Its Footing After Sharp Sell-Off

A wave of calm has returned to the gold market following a turbulent start to the week. Prices have steadied just below recent peaks, with silver also attempting to recover from a significant drop. The central question for investors now is whether this pullback represents a necessary pause in an overheated rally or the beginning of a more profound shift.

The fundamental backdrop for gold remains shaped by geopolitical and monetary policy uncertainty. Concerns over escalating political conflict in the United States, alongside a visible power struggle between the White House and Federal Reserve Chair Jerome Powell, continue to undermine confidence in the U.S. dollar.

Simultaneously, central banks from BRICS nations persist with their strategy of diversification. Ongoing gold purchases aim to reduce dollar dependency, creating a substantial layer of support that helps cushion any downward price moves. In this environment, the area around $4,300 per ounce is viewed as a robust support zone. Some institutional players even see the recent decline as a "discount" opportunity, particularly for those who missed entry points during the earlier surge and are targeting levels below $4,400.

Price Action and Market Sentiment

After Monday's sharp decline, both precious metals are recouping a portion of their losses. Gold settled yesterday at $4,350.20 per troy ounce, placing it roughly 3.7% below its 52-week high of $4,562. Despite the recent setback, the metal retains a gain of nearly 3% over the past 30 days, with its year-to-date performance for 2025 solidly in double-digit territory.

Silver exhibited greater volatility, experiencing a confirmed single-day drop of 8.7% on Monday. While this was less severe than initial rumors of a double-digit crash, it marked a clear interruption to its rally.

Key Technical Levels:
* Gold is trading near $4,350, approximately 11% above its 52-week low of $3,941.30.
* The 50-day moving average sits at $4,226.95, meaning current prices are about 4% above this level.
* A 14-day Relative Strength Index (RSI) reading of 57.7 indicates the market is neither extremely overbought nor oversold.
* The short-term 7-day performance stands at -2.72%, consistent with a routine consolidation phase.

Should investors sell immediately? Or is it worth buying Gold?

The prevailing interpretation among traders is that the sell-off was a "shakeout"—a healthy cleansing of speculative positions in a strongly trending market rather than a trend reversal.

Major Banks Reinforce Bullish Outlook

Leading investment institutions have reaffirmed their positive long-term forecasts. UBS has revised its gold projections upward. In its optimistic "Upside Case" scenario, analysts believe the price could reach $4,900 by the second quarter of 2026. The firm's base case target has been raised to $4,500.

Deutsche Bank presents an even more aggressive stance. Its analysts, citing steady investor inflows and persistent central bank demand, suggest a move toward $5,000 per ounce is feasible. Notably, both banks view the overarching bullish trend as intact despite the recent correction.

This confidence is further reflected in gold-backed exchange-traded funds (ETFs). Holdings in these instruments remain near their yearly highs, signaling that major investors are using price dips to establish or increase positions rather than taking aggressive profits.

Outlook: Consolidation Within an Uptrend

The overall picture suggests a period of healthy consolidation within a continuing upward trend. Gold continues to trade well above its key 50-day average, its annual performance remains robust, and influential banks have recently raised their price targets.

As long as political tensions persist, the future path of U.S. monetary policy stays uncertain, and central banks maintain their purchasing programs, a solid floor around $4,300 appears likely. The critical factor for the next leg higher will be gold's ability to defend this support zone against any further selling pressure. If it holds, the ambitious price targets set by UBS and Deutsche Bank for 2026 remain firmly within reach.