Gold prices are showing signs that a bear market may have begun, with the asset recording its first red weekly Gaussian channel signal since 2023. The technical indicator suggests that the decades-long uptrend in gold may be losing momentum, putting the $3,550 support level in play.
The Gaussian channel, a technical analysis tool that tracks price trends using a moving average and standard deviation bands, has flipped bearish on the weekly timeframe for the first time in over three years. This signal has historically preceded sustained periods of price weakness in gold.
Gold has been under pressure from multiple fronts. The US dollar has strengthened as the Federal Reserve maintains elevated interest rates, making dollar-denominated gold less attractive to international buyers. Rising real yields have also reduced the appeal of gold, which does not pay interest or dividends.
Geopolitical factors have added to the selling pressure. Iran’s threats to disrupt shipping through the Bab el-Mandeb strait have triggered a risk-off shift across asset classes. Gold and silver collectively lost approximately $700 billion in market value as investors rotated into cash and short-term government debt.
The selloff in precious metals has implications for cryptocurrency markets. Bitcoin has historically been viewed by some investors as a digital alternative to gold, and capital flows between the two markets have shown correlation during periods of stress. If the gold bear market deepens, it could either benefit Bitcoin as investors seek alternative stores of value or drag it lower as risk appetite contracts across all asset classes.
For gold investors, the key level to watch is $3,550, which represents the lower boundary of the Gaussian channel. A sustained break below this level would confirm the bearish trend and could open the door to further declines. Conversely, a bounce from this level would indicate that the long-term uptrend remains intact despite the recent weakness.
This article was adapted from BeInCrypto. Read the original here.
