Gold Prices Slip as Margin Calls Spark Liquidation, But Recession Risk Keeps Bullish Bias Intact
Gold prices are under pressure for a second consecutive session on Friday, pulling back from all-time highs as traders respond to technical signals and heavy selling tied to margin calls in equity markets. Despite growing concerns about a U.S. recession, gold is struggling to hold key levels after Thursday’s bearish closing price reversal pattern.
At 12:28 GMT, XAUUSD is trading $3095.25, down $19.32 or -0.62%.
Margin Call Selling Caps Upside Momentum
Thursday’s surge to record highs was met with aggressive selling, triggered in part by margin calls following a sharp equity market rout. Dow futures dropped another 1,100 points early Friday, extending Thursday’s 1,679-point collapse. The S&P 500 also plunged nearly 5% in the previous session. Forced liquidation from leveraged equity accounts appears to be spilling into gold markets, interrupting the metal’s upward trend.
Key Levels in Focus After Bearish Technical Reversal
Price action now hinges on trader reaction to the short-term pivot at $3083.65. Holding above this level could trigger a move back toward $3111.02 and potentially a retest of $3167.84. However, a sustained move below $3083.65 and a break under Thursday’s low at $3054.19 would confirm the reversal pattern, setting up a deeper correction toward initial support at $3000.28. The 50-day moving average at $2939.52 remains a critical level, controlling the longer-term trend and acting as a potential dip-buying zone.
El-Erian Flags Rising Recession and Inflation Risks
Macro concerns continue to support the case for gold. Allianz Chief Economic Advisor Mohamed El-Erian warned Friday that the probability of a U.S. recession has risen to 50%, driven by slowing growth and aggressive trade policy. He also noted that inflation expectations are increasing, with core PCE — the Fed’s preferred inflation gauge — posting its biggest monthly gain in over a year.
Despite markets pricing in four rate cuts, El-Erian pushed back on that view, suggesting that only one — or possibly none — may materialize. If the Fed stays restrictive while growth slows, real yields could soften, a tailwind for gold prices.
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See all Gold forecastsGold Prices Forecast: Correction May Offer Buying Opportunity
While gold faces near-term technical weakness, the broader trend remains bullish. Elevated inflation, rising recession odds, and equity market stress continue to underpin the metal’s safe-haven appeal.
A pullback toward $3000 or even the 50-day MA around $2940 could present value for dip buyers. As long as gold holds above this longer-term support, the market retains upside potential, with a break above $3111.02 likely to revive bullish momentum.
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