Summary
⚈ Recent pullback linked to easing U.S.-China tensions and improved market sentiment.
⚈ Long-term outlook remains bullish, with forecasts up to $5,000 by 2026.
Gold prices are currently trading at a significant premium and may be entering a period of correction, according to Bloomberg’s senior commodity strategist, Mike McGlone.
His assessment follows gold’s bullish run, which saw it hit a new record high of $3,500. However, at press time, the precious metal was valued at $3,319, down 1.5% on the daily chart. Year-to-date, the yellow metal is up 26%.
According to McGlone, gold, which was trading at a 70% premium to its 60-month moving average (MA) as of April 22, is in a “stretched bull market” reminiscent of the 2006-2007 period, he said in an X post on April 23.
McGlone’s analysis noted that the yellow metal’s current trajectory mirrors the overextended bull run of the mid-2000s, which was followed by notable pullbacks. He expects the commodity to retrace to the $3,000 level.
“Gold is in a stretched bull market. Pullbacks toward $3,000 an ounce are possible if past patterns are a guide,” he said.
Stock market influence on gold
The strategist emphasized the influence of the U.S. stock market on gold’s price movements, noting that equity market trends could play a critical role in determining the metal’s near-term direction.
His warning comes after gold experienced a minor pullback after a sustained capital inflow. Notably, economic uncertainty stemming from trade tensions between the United States and China has contributed to the metal’s momentum.
The latest price retracement followed President Donald Trump’s positive remarks about the U.S.-China trade situation, in which he noted that tariffs “will come down substantially, but won’t be zero.”
Similarly, President Trump’s decision to back off from pushing for Fed Chair Jerome Powell’s exit prompted investors to slow their defensive positioning in assets like gold.
Wall Street remains bullish on gold
However, given lingering economic uncertainties, Wall Street’s outlook suggests that the current sell-off in gold may be temporary.
In this case, banking giant JPMorgan projected that gold prices are likely to cross the $4,000 mark in 2026, driven by increased recession probabilities amid the ongoing U.S.-China trade war.
The bank now expects gold prices to average $3,675 per ounce by the end of this year and to exceed $4,000 per ounce by Q2 2026. Other estimates suggest that gold could rally to $5,000 in the near future.
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