For a long time, XAU/USD quotes rose on fundamental factors, but in 2026, gold fell into the hands of speculators. Its exponential growth proves this. The collapse was inevitable. Now, the crowd of bulls is divided. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- Gold has faced an extreme speculative fervor.
- The previous drivers of the XAU/USD are not as strong.
- The precious metal’s price is driven by the crowd.
- Short trades on gold can be opened below $5,080 per ounce.
Weekly Fundamental Forecast for Gold
If even the US Treasury Secretary calls the events unfolding on the gold market a speculative bubble, then it is highly likely that this is indeed the case. According to Scott Bessent, the precious metals market in China has become somewhat unruly, forcing local exchanges to tighten margin requirements. In fact, the CME is doing the exact same thing, and the rush of demand is not limited to China; it extends to India as well. There, the influx of capital into gold ETFs has become comparable to inflows into stock market funds.
India’s Gold ETF Inflows
Source: Reuters.
As a rule, commodity markets are cyclical. Everything that rises will eventually fall. Just as a rocket soars into the sky, it will eventually return to earth. In 2026, gold grew exponentially and was doomed to collapse. The last part of the XAU/USD rally was nothing more than speculative madness.
Indeed, the uptrend should have a solid foundation. However, many drivers are no longer as strong as they used to be. After three consecutive years of central banks buying 1,000 tons or more of bullion, in 2025, they slowed down to 860 tons. Could a debasement trade and growing distrust of the US dollar be among the main reasons for this? Unfortunately, the share of the greenback in gold and foreign exchange reserves, international settlements, and conversion operations on Forex is so large that it is impossible to replace it for at least the next 10 years.
Can a Fed rate cut become a game-changer? It’s written in the stars, even if Kevin Warsh takes the Fed chair. The FOMC is a collegial body, and decisions are made through consensus. It will not be easy for someone who has long criticized the central bank to secure a majority of votes. What about the rapid growth of US public debt? This is an ongoing process, and when it was happening, precious metals often faced bear markets.
What is happening now can only be described as mass doubt. Hedge funds and asset managers, or so-called smart money, made their decision long ago. They have reduced their net long positions in gold to their lowest levels since October.
Speculative Positions on Gold
Source: Bloomberg.
Where, where are you rushing to, you madmen? Horace’s words describe the situation perfectly. In fact, the crowd is divided. The first group started buying gold a year ago and is now seeing a profit of about 70%. The second group entered the gold market at $5,100 and above and is now frantically trying to figure out what to do.
It turns out that the current swings in gold prices are not about fundamental factors. Instead, they are driven by speculative flows, which are difficult to predict. At the same time, they should not be underestimated.
Weekly Trading Plan for XAUUSD
In such conditions, if gold returns above $5,080 per ounce, the rally will likely continue, creating an opportunity to open long positions. Otherwise, it will be better to sell gold when its price rises.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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