Analysts Spot Warning Signs as Gold’s Monster Rally Approaches Peak

Gold's historic bull run shows cracks forming as technical indicators flash caution signals.

The Reality Check

Momentum indicators that once screamed 'buy' now whisper 'proceed with caution' after gold's relentless climb. The metal's parabolic move has traditional safe-haven investors scratching their heads while technical analysts point to classic topping patterns emerging on charts.

Divergences between price action and key oscillators suggest the rally's engine might be running out of fuel. Volume patterns tell a similar story—declining participation despite higher prices often precedes significant reversals.

Meanwhile, institutional positioning data reveals smart money starting to take profits rather than adding exposure. The options market shows increased hedging activity as traders brace for potential downside volatility.

Gold's recent behavior mirrors previous market peaks where euphoria eventually gave way to reality. The metal now faces its toughest test—maintaining altitude without the tailwinds that propelled its ascent.

Because nothing says 'stable store of value' like a asset that moves 30% in six months before everyone suddenly remembers it pays zero yield and costs money to store.

Analysts warn about signs of peaking in gold’s monster rally

Michael Hsieh, strategist at Deutsche Bank, analyzed that technical indicators suggest the rally is about to hit a peak. In his words:

“We do not see this as a sign of an impending correction. At most, it may point to a period of more neutral behaviour like that between June and August. Fair value has risen along with gold in the past two months.”

That means the market could settle into a pause rather than collapse outright.

Silver is also rallying, hitting $50 per ounce for the first time ever just yesterday as investors reacted to a supply squeeze in London. Vaulted silver, which has filled the gap in the market for years, is now described as “running dry.” That shortage has tightened the physical market, forcing prices higher and adding to the metals’ rally.

Some see the rally climbing far higher. Randy Smallwood, Chief Executive Officer of Wheaton Precious Metals Corp., said during an interview on Bloomberg Television:

“I’m confident that we will see gold over $5,000 within the next year. It’s a trajectory that could easily put it up to $10,000 an ounce before the end of the decade. It wouldn’t surprise me at all.”

Randy also addressed the pressure on silver. He said, “We’ve been operating in a deficit mode in the silver market for a long time. Vaulted silver has been feeding the deficit, but now those vaults are running dry.” The shortage has strengthened the case for investors turning to metals as supply remains tight.

Join Bybit now and claim a $50 bonus in minutes