Gold’s extraordinary rally in 2024 and early 2025 is beginning to show signs of fatigue, as multiple indicators point to a shift in momentum on both the daily and higher timeframes. Although the long-term fundamentals remain bullish for gold due to global geopolitical tensions, inflation hedging, and central bank accumulation, near-term technical patterns suggest that a corrective phase may be underway.
Signs of Exhaustion on the Higher Timeframes
Since its all-time high in April, gold has struggled to maintain upward momentum. On the weekly chart, price action has begun to overlap, indicating indecision and a potential stall in trend direction. The formation of a Rickshaw Man doji on the May monthly candle—a candlestick with long upper and lower shadows and a small real body—signals market hesitation after months of aggressive buying pressure.
Additionally, May marked the first month since November 2023 in which bulls failed to push gold prices above the prior month’s high. This subtle but important change in price behavior suggests that the vertical rally seen since January may be overextended and ripe for a pullback.
While these signals don’t confirm a long-term reversal, they do suggest a change in character, and open the door for a potential bearish correction or consolidation.
Daily Chart Reveals Bearish Reversal Pattern
On the daily chart, gold has printed a two-bar bearish reversal pattern—specifically, a dark cloud cover—at the May high. This pattern occurs when a bullish candle is followed by a bearish candle that opens above the prior high and closes deep into the previous day’s body, indicating that sellers have entered the market aggressively.
Because this pattern formed near a key resistance level, it adds credibility to the case for a short-term swing high. A correction toward the $3,313 support level is now a realistic scenario in the days ahead, particularly if bulls remain unable to reclaim the May high.
Medium-Term Correction in Play: Double Zig-Zag Potential
If the reversal gains traction, a larger correction could unfold in the form of a double zig-zag—a common Elliott Wave corrective structure labeled W-X-Y. This would suggest an ABC move lower within each leg, targeting the $3,000–$3,031 zone as a deeper retracement level. However, such a development would likely require an improved risk appetite in broader markets, which could sap safe-haven demand for gold.
That said, the correction scenario remains contingent on gold staying below the May peak. If bulls regain control and push prices to new highs, any bearish thesis would be invalidated.
Intraday Support and Pivot Levels to Watch
Zooming into the 1-hour chart, gold appears to be attempting to form a swing low above the $3,400 mark, currently hovering around its weekly pivot. The Relative Strength Index (RSI 14) has rebounded from oversold levels and now shows a small bullish divergence, suggesting that a minor short-term bounce could be due.
For intraday traders and tactical bears, Tuesday’s price range offers potential opportunities. The weekly S1 pivot at $3,354.70 coincides with two high-volume nodes (HVNs), making the $3,340–$3,355 area a compelling short-term support zone. This zone lies just above the $3,313 level—a key swing low that now serves as the primary near-term downside target.
As long as prices remain below Monday’s high, bears may look to fade minor rallies within this zone, maintaining a cautious bearish bias.
Macro Factors Still Dominate Longer-Term Outlook
While technicals suggest short-term weakness, it’s important to note that macro fundamentals remain broadly supportive of gold. Central banks continue to increase their gold reserves, and investor demand remains elevated amid persistent geopolitical risks and uncertainty around U.S. monetary policy. Additionally, the U.S. dollar has weakened slightly, and real interest rates remain historically low—conditions that typically favor gold.
However, any dovish shift by the Federal Reserve, or progress in Israel-Iran ceasefire talks, could temporarily reduce demand for safe-haven assets. Citi analysts recently noted that gold could dip below $3,000/oz in the coming quarters as the rally loses steam and investor demand cools.
Conclusion
After a historic rally that took gold above $3,450/oz, a short-term pullback now appears to be developing. The technical setup—particularly the dark cloud cover near the May high—gives bears a reason to engage cautiously, with downside targets around $3,313 and potentially as low as $3,000 if broader market sentiment supports it.
However, any bearish setup must be managed with care, given the strong macro tailwinds that continue to support gold in the medium to long term. The market remains highly sensitive to geopolitical headlines and central bank commentary, both of which can quickly invalidate short-term technical patterns.
For now, all eyes are on the evolving chart structure and upcoming Fed guidance, which could either reinforce the correction or revive the gold rally anew.
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