• The gold outlook remains slightly deteriorated after a 4% plunge in a single session amid profit-taking.
• The structural demand for gold stays intact, with institutional targets set at $6,200 by mid-2026.
• Gold’s path could be bumpy depending on US macroeconomic data releases.

Gold has been experiencing increased volatility after breaking the $5,500 barrier. The metal recorded a 20% gain in January, the strongest monthly performance since 1980, driven by geopolitical friction and new US trade tariffs. However, this parabolic rise has met immediate resistance, triggering a sharp correction that saw spot prices plunge over 4% in a single session amid profit-taking.

The immediate focus for traders is the sustainability of the current floor. The pullback was exacerbated by a rebounding US dollar, which pressured the precious metal. Despite the shakeout, the fundamental drivers for a continued bull market remain intact. Institutional analysis points to persistent central bank accumulation and “stateless” asset demand as key factors that will limit downside risk in the medium term.

Looking forward, the forecast is shifting aggressively higher. UBS has revised its outlook, now projecting that gold prices could reach $6,200 by mid-2026. This bullish thesis relies on the expectation that real interest rates will eventually moderate and that geopolitical risk premiums will become a permanent fixture of asset pricing.

However, the path to $6,000 is fraught with event risk. The Fed’s policy is still a key headwind. If US economic data stays strong and forces the Fed to keep its “higher for longer” stance, the opportunity cost of holding non-yielding bullion could limit gains.

On the other hand, any worsening of conflicts in the Middle East or confirmation of new tariffs would likely push the next leg up. Before the next big move in the market, it is now getting ready for a period of consolidation.

Moving ahead, market participants will remain focused on the US PPI to find fresh impetus, as Fed Chair Powell reiterated the data-dependent approach in the last press conference, making major releases further necessary.
 

Gold Technical Outlook: Bulls Weak Below 20-MA
 

(Click on image to enlarge)

Gold 4-hour chart
 

The 4-hour gold chart shows a solid demand zone near $5,100, tested twice over the last 4 candles. However, the price has fallen below the 20-period MA, indicating strong selling pressure. If the zone fails to hold the sellers, the price could test the psychological $5,000 level ahead of the 100- and 200-period MAs at $4,820 and $4,600, respectively.

However, the RSI, which had fallen below 50.0, is now flat, suggesting potential consolidation before any decisive move. In case of bullish momentum, the yellow metal could test the 20-period MA at $5,280, then $5,400, and then $5,600.

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