Gold price is finally showing signs of weakness after its recent run to all-time highs.
We're now witnessing a potentially significant weekly reversal pattern that deserves immediate attention from precious metals investors.
Gold's Battle at the Critical $3,000 Level
After briefly touching $3,065 yesterday, gold retreated significantly today, falling to as low as $3,004 before stabilizing. This rapid reversal shows the struggle bulls are facing to maintain momentum above the psychologically important $3,000 level.
What makes today's action particularly significant is that we're now forming a weekly reversal candlestick. All that needs to happen for this candlestick to fully form is... nothing. If gold simply closes today where it currently is trading, the reversal signal will be confirmed.
This pattern is remarkably similar to what we saw at the 2011 top near the $2,000 level. Just as then, gold is struggling at a psychologically important round number while mining stocks and silver show significant relative weakness - a classic warning sign that has preceded major corrections throughout gold price history.
If gold were to close the week below $3,000, the technical implications would be even more bearish, as it would represent a failed attempt to maintain levels above this critical psychological barrier.
Silver's Warning Signal Grows Louder
Silver's significant weakness today provides another critical confirmation of the potential reversal forming in precious metals. Throughout market history, silver has often served as the "canary in the coal mine" for the broader precious metals complex due to its higher volatility and industrial component.
The white metal's inability to approach its 2021 highs despite gold's substantial new all-time highs creates exactly the kind of divergence pattern that has historically preceded major precious metals corrections. Remember how silver didn't move to new highs while gold did at gold's 2011 top? We're seeing a similar pattern today.
USD Index's Bottom Formation and CoT Data
Interestingly, the decline in gold wasn't triggered by a sizable rally in the USD Index yet, but the technical evidence suggests one may be coming.
While the USD Index didn't manage to close above the 61.8% Fibonacci retracement yesterday, it did manage to close above the first March low. The invalidation of the breakdown is a bullish sign for the dollar, and the fact that it's not declining despite new tariff threats is particularly noteworthy.
The Commitment of Traders (CoT) report for the USD Index adds an important dimension to this analysis:
Commercials' net position has been forming a broad bottom for a considerable time. Previous rallies in the dollar started from similar circumstances (late 2023, second half of 2024). Also, when this net position was at current levels in 2021, a substantial rally followed in the subsequent months.
This is significant because major dollar rallies often coincide with gold corrections, particularly when other technical factors align as they do now.
Broader Markets Confirm Economic Weakness
The broader market context strongly validates a cautious outlook for precious metals. Major equity indices are declining today, with the Dow down 0.6%, S&P 500 falling 0.5%, and NASDAQ dropping 0.5%.
More telling than the surface-level declines are the explicit confirmations of economic deterioration from corporate America:
- FedEx shares plummeted 10% after slashing its profit and revenue outlook, with the CFO explicitly citing "continued weakness and uncertainty in the U.S. industrial economy"
- Nike stock slipped over 7% after fiscal fourth-quarter revenue estimates came in below analysts' expectations
- Lennar Corporation fell 5% as high borrowing costs and shaky consumer confidence weighed on its housing business
This real-world confirmation of economic weakness aligns perfectly with the stagflationary signals from the Fed's latest projections - higher inflation forecasts combined with lower growth expectations.
The Tariff Timeline and Market Impact
The approaching April 2nd deadline for potential "retaliatory tariffs" on all US trading partners - labeled "Liberation Day" by President Trump - creates additional market uncertainty. While the EU has delayed some counter-tariffs to allow for negotiations, the overall trade policy environment remains highly unsettled.
This tariff implementation timeline potentially provides a fundamental catalyst that aligns with the technical patterns we're observing. Particularly notable is the fact that major corporations are already citing economic uncertainty as a significant headwind to their businesses.
What This Means for Investors
The constellation of technical signals currently present in precious metals markets warrants careful attention:
- Gold's struggle to maintain momentum above $3,000
- A likely weekly reversal candlestick forming
- Mining stocks' persistent weakness relative to gold
- Silver's inability to approach its 2021 highs
- The dollar's move back above key technical levels
- Broader market weakness and explicit corporate warnings
While gold remains a valuable portfolio component for many investors, particularly for its inflation hedge properties, markets rarely move in straight lines. The current technical picture suggests we may be witnessing an important inflection point similar to what we observed in 2011.
For precious metals investors, it's crucial to monitor whether gold can maintain levels above $3,000 through the weekly close and how mining stocks perform relative to gold in the coming days. The dollar's behavior around current support levels will also provide important clues about the likely direction of the gold market in the weeks ahead.
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Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief