Gold News: Gold Market Analysis Shows 50-Day MA Critical After 65% Rally

Gold Drops Below Key Resistance as October Breakout Buyers Get Trapped

Spot Gold (XAUUSD) is edging lower on Wednesday as short-term sellers continue to exert pressure on the long-term bull market, following Monday’s plunge. The break below the October top at $4381.44 is particularly disturbing because it means aggressive traders who bought that breakout are trapped on the wrong side of the market, and this could turn into a painful situation for them.

At 13:36 GMT, XAUUSD is trading $4326.26, down $13.13 or -0.30%.

Critical Support Zone: 50-Day MA at $4,175 Holds Key to Bull Market Survival

The market has also dropped below a short-term 50% level, making $4350.27 to $4381.44 resistance. The daily chart now suggests traders are aiming for the value area created by the intermediate 50% level at $4211.60 and the 50-day moving average at $4174.88. We expect to see buyers return on a test of this area.

The 50-day MA is of particular importance because it is also our main trend indicator. It has been directing the market higher since mid-August. Breaking it with conviction could shift the narrative of this market from extremely bullish to just bullish.

History Suggests Potential Flush to $4,042 as Weak Longs Face Reckoning

Looking back to October, the market sold off from $4381.44 to $3886.46 in a mere six trading sessions. That’s $494.98 if you do the math. If we repeat the pattern then we could be looking at a flush out to $4041.76 by Tuesday, January 6. But that’s what markets do, they take out the weak longs before moving higher. The problem is that some bullish investors have gotten used to buying “the dips” for four months and they have no plan if this strategy fails. Don’t worry, however, because the market will make you pay for its plan if you didn’t already have an exit strategy.

Gold’s 65% Surge Marks Best Year in Four Decades Before Year-End Reset

Despite the long-term bullish outlook, XAUUSD could drift for months before the uptrend resumes. Nonetheless, the market is still on course for huge annual gains. Gold’s magical run of higher tops and higher bottoms throughout the year produced its best performance in more than 40 years.

Gold skyrocketed about 65% this year with a steady climb most of the time until it went ballistic late in the year and blew out its own bullish flame. It’s now time for a reset, but that’s no problem because some of the same fundamentals that drove the engine last year, are expected to return in 2026. Next year, investors will again get the opportunity to react to the impact of U.S. interest rate cuts, expectations of further monetary easing, geopolitical issues, robust central bank buying, and robust ETF inflows.

Higher Margins and Public Selling Could Temper 2026 Rally Despite Fed Cuts

The fact that “everybody” now knows about the new bull market in gold will make it more difficult to match last year’s gains. We now have the exchange watching, which means higher margins to get in the game. We also have the general public that controls the hidden supply the bean counters don’t know about. This could stall the rally if they decide to start selling in the cash market.

2026 Outlook: Rate Cuts Support Uptrend But Resistance Pockets Expected

Look for the market to continue to trend higher in 2026 if the Fed cuts rates 2 or 3 times, but be prepared for pockets of resistance and selling pressure if central bank buying cools due to an improving global economy and if more supply becomes available due to public selling of physical gold.

More Information in our Economic Calendar.