Gold rally collapses: Traders now fear a crash towards $3,500

The gold market is suddenly losing momentum. After several weeks of growth and projections beyond $5,000, the yellow metal is now multiplying signals of weakness. The break of major technical support, combined with a rise in volatility and the return of selling pressure, revives scenarios of a deeper correction. Investors are now monitoring the threshold of $4,376, while some analysts are already talking about a return to $3,500.

The break of $4,376 could rock the gold market

Since its historic record, the price of gold has been showing a series of signals of weakness. The yellow metal is now trading around $4,410, after a daily drop of close to 2%, while several technical indicators are beginning to fuel analysts' concerns:

• The 0.618 Fibonacci retracement at $4,376 now serves as key support;
• The 4-hour RSI fell to 27, signaling an oversold situation;
• The BBWP, used to measure the expansion of volatility, continues to increase;
• A clear break below $4,376 would potentially open the way towards $4,044 and then $3,500.

Analyst CelalKucuker summary the current degradation with this projection: “gold fell from $5,600 to $4,350, before rebounding towards $5,250 and then falling back to $4,000. After a further return to $5,000, the yellow metal fell to $4,600 then $4,200, with a target now close to $3,500 by the end of 2026..

This situation contrasts sharply with the expectations observed a few weeks earlier. At the beginning of May, several scenarios still counted on a bullish extension towards $5,000 after a technical breakout deemed favorable. The target of $5,131 was circulating even among the most widely relayed projections.

Now the charts show the opposite: a succession of lower highs and an inability for the yellow metal to regain its former resistance levels. If the $4,376 support were to give way sustainably, the next areas monitored by traders would be around $4,044, then potentially around $3,500 over a longer horizon.

Institutional investors had already sent several warning signals

Even before the current acceleration, several indicators revealed a change in behavior among professional market players. CFTC data showed an increase of 10,818 additional short contracts held by commercial hedgers. This increase in short positions appeared as gold was already starting to lose its major 20, 50 and 100 day moving averages.

Other macroeconomic elements also reinforced doubts about the strength of the previous rally. According to certain on-chain data, the 17% increase recorded by gold was based on foundations considered fragile, in particular because of an unusual correlation with oil. Historically, the strongest bullish phases of the yellow metal appear when this correlation deteriorates. Aggressive speculative flows in the options market had also been identified before the current correction, suggesting that some investors were already looking to secure their gains.

The gold market is now entering a zone of uncertainty where scenarios diverge sharply. Some traders continue to see it as a technical correction after an excessive bullish phase, while others consider that the bull cycle may have reached a point of temporary exhaustion. The price behavior around $4,376 should now serve as a barometer for the coming weeks. A stabilization would revive hopes of a rebound, while a clear break could accelerate the defensive repositioning of investors.