Unexpected development.
In the afternoon trading session, gold prices saw a decrease, potentially signalling a larger correction in the gold market. This development comes after a significant rally at the start of the trading week, which was primarily driven by geopolitical tensions such as the U.S. attack on Iran.
Recent analysis reveals that gold gave away a large part of its gain following the initial rally, indicating weakness and a potential continuation of a corrective phase. Technical patterns also suggest that gold has broken down from previous supports and is currently in a stage comparable to the late-2012/early-2013 period of the last major gold bull market's correction. This pattern suggests that the recent rally is unlikely to last, and a larger bearish phase could continue.
Since mid-April 2025, the gold market has been undergoing a notable correction, with an approximately 11% decline over 2.5 months. Despite some signs of healthy consolidation and support forming near key moving averages (expected to be around $3,200 by August-September 2025), the correction phase remains active.
Crucial support zones around $3,300 and $3,200 are essential. If gold fails to hold these supports, further downward corrections may occur, potentially leading to a reversal of the recent uptrend.
Geopolitical events like the U.S. attack on Iran typically cause initial price spikes due to safe-haven demand. However, technical and historical market patterns suggest that such rallies can be short-lived, followed by pullbacks or corrections.
It is important to note that the afternoon price decrease in gold could be influenced by other market factors not directly related to the U.S. attack on Iran. This decrease might be a short-term trend or a buying opportunity for some investors. However, the overall market sentiment could be affected by this development.
In summary, while geopolitical tensions sparked an initial gold price surge, technical analysis and historical precedent point towards a likely larger correction continuing in the near term rather than a sustained rally. The market is currently navigating a complex phase of consolidation and correction, with important support levels to watch that will determine if the bullish trend can resume or if the bearish pattern deepens.
Investors might find the current gold correction as an opportunity for investing, given the afternoon price decrease and the technical patterns suggesting a potential continuation of the bearish phase. Despite geopolitical tensions contributing to the initial gold rally, finance analysts predict a larger correction in the gold market rather than a sustained investing rally in the near term.
