Gold prices are consolidating after a sharp August rally, with selling pressure pushing the metal toward $4,600 following a test of the $4,700 area. According to a technical analysis, the decline is viewed as a corrective phase rather than the start of a broader bearish trend, as the market seeks to unwind overbought conditions accumulated during the recent advance.
The pullback comes amid heightened volatility ahead of key U.S. inflation data and remarks by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium. The analysis notes that today’s decline followed three consecutive days of gains, with initial support observed around $4,610–$4,600. A deeper correction could extend toward $4,595–$4,570, provided the decline remains within a corrective structure on the H4 timeframe.
The analysis advises against chasing gold at current levels, instead advocating for a wait-and-see approach to allow a correction to develop. Buying opportunities would be reconsidered once sellers lose momentum, a base forms, and the price reclaims local resistance levels on shorter timeframes.
Macroeconomic factors continue to underpin gold’s longer-term outlook. The recent rally was partly driven by the U.S. Treasury’s increased buybacks of longer-dated bonds, which contributed to softer U.S. yields and a weaker dollar. The analysis highlights ongoing strains in the U.S. Treasury market, including rising debt issuance, refinancing needs, and diminished demand from traditional buyers, which could keep long-term yields elevated and pressure the dollar.
While the Federal Reserve remains a near-term risk—with upcoming inflation data and hawkish commentary potentially lifting yields and the dollar—the analysis suggests a deeper correction could present more attractive entry points for long positions. Central-bank demand remains a key structural support, with net purchases of approximately 289 tonnes in Q2, up 62% year-over-year, according to the World Gold Council. A record 45% of surveyed reserve managers expect their institutions to increase gold holdings over the next 12 months.
Investment demand has also rebounded, with gold ETFs recording inflows of 46.7 tonnes ($6.4 billion) in the prior week—the strongest weekly gain in nearly a decade. The World Gold Council projects that a combination of lower interest rates, a weaker dollar, and persistent uncertainty could continue to bolster gold prices.
The analysis maintains a medium-term bullish stance, emphasizing the importance of patience in timing entries. The focus remains on identifying a proper correction, waiting for buyer re-entry, and confirming a reversal on lower timeframes before establishing new positions.
