Gold at $4,012 as Sprott's Wong calls metal oversold before rebound

Gold has fallen 28 percent from its January record and is now "massively oversold" by every meaningful metric, according to Sprott Inc.

Gold fell to $4,011.70 an ounce, down 28 percent from its January record of $5,597.23, as the metal trades below its 200-day moving average.

"Gold is massively oversold by every meaningful metric," Paul Wong, managing partner and market strategist at Sprott Inc., said in an interview with Kitco News.

The metal tends to find support when prices fall to 90 percent of the 200-day moving average, and current levels have already overshot that threshold, Wong said. Gold has lost 3.5 percent over the past month and sits 28 percent below the $5,597.23 record set on Jan. 29, according to market data. The 52-week range spans $3,283 to $5,597, placing the current price near the midpoint of that band.

Wong expects a cyclical bottom before September, with currency debasement serving as the fundamental driver that will push gold to its next all-time high. The metal has gained 122 percent over the past five years, outperforming the S&P 500's 75 percent return over the same period, according to SPDR S&P 500 ETF Trust data.

28% Below the Peak — and Below the 200-Day

Gold's decline accelerated after the Federal Reserve's hawkish January meeting minutes pushed US Treasury yields higher and strengthened the dollar, making the metal more expensive for international buyers. COMEX gold futures data shows the selloff gathered pace below the $4,912 support level, triggering the sort of panic selling seen in prior corrections. The 50 and 200-period moving averages on the 4-hour chart have both turned lower, confirming the bearish structure, though the RSI has drifted into oversold territory near 30, a level that has preceded rebounds in past cycles.

Central Banks and PCE Data Hold the Key

Despite the selloff, Wong identifies currency debasement as the structural catalyst for the next leg higher. Central banks continue to diversify reserves away from the US dollar as trade tensions persist and US debt-to-GDP ratios rise. The World Gold Council's latest central bank survey indicates gold buying is likely to persist as institutions seek to reduce dollar dependence. JP Morgan's global research forecasts gold climbing toward $4,000 by mid-2026 — a level the metal has already traded near. The next catalyst for gold comes Friday with the release of US PCE inflation data, the Federal Reserve's preferred inflation gauge, which could shape expectations around the pace of rate cuts. A softer reading would weaken the dollar and remove one of the key headwinds that has kept gold below $5,000 since January.

This article is for informational purposes only and does not constitute investment advice.