Published February 2, 2026
Gold was clearly significantly over-extended to the upside and had fallen victim to a self-fuelling speculative frenzy with momentum feeding upon itself. Yes, hindsight is a beautiful thing.
I am not convinced the appointment of Warsh was the trigger for the fall but more simply the weight of excess that collapsed upon itself. We suggested there is a trend line going back to last Summer in our report last night HERE which suggests gold should find support at $4520, which it has now done and, if gold follows classic technical analysis thinking, then we should expect a 50% retracement from here - in other words gold should make its way back to $4960.
If it fails to do that then that would suggest sentiment has been mortally wounded by the fall. Although the fall was large and fast, it should also be remembered that we are currently at levels just 3 weeks ago. In short, this is a significant correction but it does not, by any stretch of the imagination, signify the bull run has ended.
It is interesting that silver outperformed gold both to the upside and now outperforms by the size of the correction ; this suggests to us that silver had a larger element of speculative interest embedded in the price than gold, which as we have always said, is primarilty being purchased by central banks for whom price is less important and the buying behaviour much stickier.
We maintain our gold price forecast which is that gold will see a high in 2026 of $6400 with an average price of $5375. We were concerned that gold seemed to be doing in the first month what we expected for the full year, but likely the speculative excess over-exuberance has now been removed and precious metals investors are more restrained in their appetites.
Just as you might know more about a person from how they behave under adversity - so it is for metals ; gold has had a big push-back and my sense is we will see a steadier price gain, targeting the 50% bounce level of $4960 in the next month or so… hopefully not quicker otherwise this will tell us speculators have learned nothing. It is a good test of its charachter.
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So what's behind this move and s gold an alternative to the the US dollar ... absolutely ... its attraction is not just its ability to outperform inflation in the long run ... a wealth protector ... but it is agnostic in that it is no one else's promise to pay ... it removes vulnerability to the dollar and US treasuries. And given that both Iin a parlous state, it follows that central bankers around the world will be selling the US and buying gold. What else compares ? The gold market is liquid with London turnover over $100 billion per day, it has a backstory in providing protection in. times such as these and it is independent - you cannot print real gold.
As regards Asia ... it is extraordinary that Asians are buying into price strength ...this is best vote of confidence in the outlook I can think of ... ordinarily Asia is price sensitive and sells into strength ... it is clear, with Indian physical premiums at 10 year highs and Chinese buying off the scale that the East has appetite for gold while the West has been only modestly so. Spoecs missed the boat entirely, institutions bought the ETF heavily but got in late ... and yes, physical demand in the form of coins and bars in the West has been off the scale, but arguably the inventory pipeline is relatively small and certainly not sufficiently large as to move the dial in the short term. Its a good sentiment indicator.
We expect gold to recover from current levels of $4520 and expect to be at near $5000 in a relatively short while.
and thanks
Ross Norman
Source: https://www.metalsdaily.com/archive/ross-norman-gold-to-bounce-to-$4960-/379583
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