Gold forecast: Technical Tuesday | February 3, 2026

The price of gold extended its recovery in the first half of Tuesday’s session, up a good 6% on the day at the time of writing. But don’t let this fool you. It’s far too early to suggest gold has found a proper bottom. If anything, I’d argue heightened volatility is here to stay for a while yet, as the one-way trade that dominated the market for months could be over now. After such a crowded and euphoric rally, we saw the first major reversal in precious metals prices in the last few days. So, one has to treat this recovery as a counter trend move until proven otherwise. The onus is on the bulls to show up and hold their levels. So far, they are doing a bit of that. BUT the big shakeout has undoubtedly changed a lot of people’s thinking and psyche. I would be very surprised if we don’t see a second wave of selling in the days ahead. The near-term gold forecast thus remains bearish.

 

Gold forecast: Second wave of selling to come?

 

Let’s start with looking at the chart of gold, because there has been some real technical damage caused by that big sell-off.  That deterioration in the bullish structure will make this recovery an ideal opportunity for the sellers to step in. The break below the psychological $5,000 level is a major bearish signal, especially given the speed and size of the move.

 

 

So far this week, gold (XAUUSD) has found some temporary support in the $4,500 zone. That was and is an important region, but despite the sharp recovery from there, it’s far too early to call this a durable bottom. After moves of this magnitude, markets usually need time to digest, and further downside follow-through is often part of the process.

 

For now, the path of least resistance still points lower. Indeed, XAUUSD is rising inside what appears to be a short-term rising wedge pattern. Despite its name, this is a bearish continuation pattern. The next resistance to watch is at $4940/5 area, marking the last support level pre breakdown. Above that, you have the key psychological level of $5000 and then another important level at $5,100. These now look like major supply zones where sellers may be keen to fade any strength.

 

For confirmation, the sellers will now be looking for a beak below the trend line of the rising wedge pattern. Should that happen, then we could see the onset of the next wave of selling. Short-term support is seen at $4900; below that $4800 is the next interesting level. But the key area remains that $4500 zone.

 

 

Gold may struggle fundamentally in the short-term

 

From a macro perspective, some of the key drivers that pushed gold relentlessly higher are beginning to fade. One of the biggest bullish narratives was the growing concern around US monetary policy credibility, particularly with political pressure on the Federal Reserve and constant speculation around imminent rate cuts.

 

That story changed abruptly after Donald Trump appointed Kevin Warsh as the new Fed chair. Markets interpreted the move as more hawkish than expected, and the reaction was immediate: a sharp rebound in the US dollar.

 

That’s not good news for gold. A stronger dollar almost always acts as a headwind for precious metals, and if this recovery in the greenback proves more than just a short-term bounce, it could place further downward pressure on gold prices.

 

Geopolitics, too, looks slightly less supportive. The risk premium around a potential US-Iran conflict has eased following more conciliatory rhetoric from Washington. Oil prices have softened as a result, and any further de-escalation reduces the appeal of safe-haven assets like gold. In simple terms, some of the fear that fuelled the rally is now starting to unwind.

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R