Gold correction is a reset rather than a reversal; the bullish bias still holds.

After Donald Trump nominated Kevin Walsch as the next Federal Reserve Chair, the gold market experienced a sharp correction. The rapid retreat from the all-time high of $5,600 prompted the market to reconsider the outlook for gold. However, this adjustment is fundamentally a repositioning rather than a reversal of the bullish trend. The key issue is not whether gold remains worth holding, but how to reinterpret its strategic value amid the correction.

Market Impact: Short-term Reset Triggered by Walsch’s Appointment

Kevin Walsch is viewed as a more hawkish and conservative Fed candidate, and his nomination immediately prompted a re-pricing in the markets:

Gold fell over 10% in the short term, quickly retreating from around $5,600 to approximately $4,679. Silver experienced an even sharper decline, dropping over 30%. Stocks related to copper, uranium, and other key materials also saw double-digit declines.

Such significant volatility may seem dangerous, but in essence, it’s a “release valve”—a normal correction after excessive stretching. Technical charts show long lower shadows on gold and silver candles, indicating that even during the decline, buyers remain actively involved. This suggests that the correction contains new positioning opportunities.

Structural Fundamentals Unchanged: The Bullish Case for Gold

Although Walsch is labeled as “hawkish,” this policy shift does not alter the fundamental outlook for metals:

Fiscal issues remain unresolved—regardless of the Fed’s policy stance, the US fiscal instability persists. This structural contradiction continues to boost demand for safe-haven assets.

Geopolitical risks have not eased—global geopolitical tensions remain high and even show signs of escalation. This further reinforces gold’s status as the ultimate safe-haven asset.

Structural supply shortages persist—demand for key metals in military and industrial sectors remains strong, and supply cannot be quickly adjusted. This provides medium- to long-term cost support for precious metals.

Central banks continue to buy—worldwide central banks are accumulating gold reserves at historically high levels. This institutional demand forms a solid foundation for gold’s long-term value.

Once confidence in the financial system shows cracks, mere policy tweaks are insufficient to repair it quickly. This means gold’s safe-haven value will be reaffirmed amid future uncertainties.

Technical Confirmation: Multiple Supports Provide Stable Repositioning

Since 2024, technical trends show a clear bullish structure: formation of an ascending triangle, breakout above $4,400, strong rally above $5,400, and surpassing the all-time high of $5,600. Last Friday’s sharp dip to $4,679, while significant, confirms high volatility rather than trend failure.

Key support levels analysis:

• First support: $4,000—this is a decisive level for the validity of the long-term bullish outlook. As long as gold stays above $4,000, the mid-term upward trend remains intact.

• Second support: $4,400—this previous breakout point has become an important psychological and technical support. Consolidation is likely to occur between $4,400 and $4,600.

• If it falls below $4,400, it could open a downtrend toward $4,000. However, even reaching $4,000 would only signify a correction phase, not a trend reversal.

In the short term, gold may consolidate between $4,400 and $4,600, building strength for another upward move.

The US Dollar Variable and Next Steps for Gold

The US dollar index rebounded from 95.50 to around 97, adding short-term uncertainty to gold. Historically, a strong dollar tends to suppress dollar-denominated gold prices.

Key dollar support/resistance levels:

• If the dollar breaks above 100.50, it may further delay the next upward cycle for gold.

• If the dollar falls below 95.50, it could decline further toward 90, providing fresh upward momentum for gold.

• From a long-term perspective, the dollar remains in a downtrend, which favors medium- to long-term positioning for gold.

While dollar strength or weakness can cause short-term fluctuations, it does not alter gold’s strategic role in global asset allocation.

Silver and the Precious Metals Ratio: Seeking New Opportunities Post-Reset

The gold-to-silver ratio has risen from 45 to 64, indicating that, in the short term, gold is relatively favored. However, historically, such extreme ratios often present contrarian opportunities.

Implications of the ratio positioning:

• The current ratio of 64 suggests market pessimism toward silver, which may be overly negative.

• A reversion below 45 could trigger a silver-led rebound.

• Long-term support is around 30, serving as a key reference for future peaks.

Meanwhile, the gold-to-platinum ratio, after touching a long-term support at 1.80 and rebounding above 2.20, indicates that gold’s relative strength against platinum and palladium has been reinforced. This confirms gold’s strategic position within the precious metals complex, even after the correction.

Correction as a Reset, Cautious Deployment

This significant correction in the gold market does not alter its long-term bullish fundamentals. Instead, it completes a strategic reset—clearing overly optimistic sentiment and laying the groundwork for the next phase of growth.

Current positioning advice:

The key support at $4,000 remains unbroken, affirming the ongoing long-term bullish trend. Short-term prudence is wise—allow market volatility to settle, then re-establish positions once clarity returns.

Deep structural factors—fiscal instability, geopolitical risks, supply shortages—continue to underpin gold’s value. As long as these persist, gold’s safe-haven attributes will remain intact.

The next upward move may be brewing. Patience and a calm approach are the best strategies in facing this correction.