Market analysts increasingly point to gold's gathering downward momentum, a perspective reinforced by both technical indicators and fundamental analysis. However, the critical question remains whether this extended rally has exhausted itself or if one final surge to new highs awaits before a more substantial correction unfolds.
Two Distinct Market Phases
An examination of daily gold futures charts reveals two markedly different phases throughout 2025. The initial period, beginning with January's opening price of $2,780.50 for Comex futures, witnessed extraordinary momentum that propelled gold to unprecedented heights above $3,500 within four months. This represented one of the most dramatic precious metals rallies in market history.
The subsequent phase presents a stark contrast. From April's monthly close through the current July 29th session, gold's closing price has shifted merely 0.34%, or $11.50. This second stage has been characterized by stagnant pricing that, while maintaining most of the earlier gains, demonstrates clear consolidation rather than continuation of the bullish trend.
The fundamental catalysts that fueled this year's rally include geopolitical tensions, particularly in the Middle East and Ukraine, along with geopolitical uncertainty. The resolution of tensions along with a more restrictive Federal Reserve monetary policy effectively ended the mass migration into hard assets like gold.
Recent price action has inflicted significant technical damage on gold's chart structure. Last week's three-day selloff surrendered just over 3% and formed a powerful bearish reversal pattern known as "three black crows" in Japanese candlestick analysis. This pattern received confirmation through Monday's session, which opened and closed at lower levels, validating the bearish signal.
Additionally, gold has opened and remained below its 50-day simple moving average this week, marking a critical technical breach. Historical precedent suggests cause for concern: the previous instance when gold fell below this moving average resulted in an additional $88 decline over the following four trading sessions. Should this pattern repeat, gold would likely test the $3,300 support level.
Silver's Contrarian Performance
Silver markets present a more complex analytical picture, influenced by multiple competing factors. While gold has declined 6% from its April highs, silver has achieved new highs not witnessed in over a decade. Despite dollar strength, silver has maintained pricing above $38, suggesting underlying fundamental support.
This divergence appears attributable to two primary factors. First, silver's price relative to gold remains historically undervalued when viewed across the last 500 years of their relative values, suggesting potential for mean reversion. Second, silver's resilience indicates investor confidence in forthcoming trade negotiations that would strengthen global manufacturing demand for industrial metals. It seems traders are betting on Trump and have traded in their rose-colored glasses for red, white, and blue tinted lenses.
The precious metals complex currently reflects opposing sentiment drivers. Silver's strength suggests optimism regarding positive trade outcomes, which would boost industrial demand while simultaneously reducing safe-haven demand that typically supports gold. This dichotomy indicates that market participants are positioning for economic expansion rather than continued uncertainty.
The technical deterioration in gold, combined with shifting fundamental drivers, suggests the metal may face additional downside pressure in the near term. Market participants should monitor both trade negotiation developments and technical support levels for guidance on precious metals positioning especially pay attention to how gold reacts if it tests $3,300.
Let us not forget that August 1st is only a day away and will bring about a dramatic influence on precious metals’ pricing whether it be positive or negative and keep in mind these likely could be inverse for gold compared to silver. Still, I would not bet against gold having one more parabolic ascent to another record in the coming days, which could begin gold’s next phase this year and mark the end of its consolatory stage we have been in for the second four-month period in gold’s evolution this year.
