WARNING: Gold Could Drop To $3,500

Gareth Soloway warns of a potential sharp short-term correction in gold prices down to $3,500, driven by investor psychology dynamics including weak-hand capitulation and deleveraging. Despite this downside risk, he maintains a strong long-term bull case for gold, framing the pullback as a tactical opportunity rather than a trend reversal. Soloway highlights the role of the U.S. dollar as a temporary safe haven amid volatility and central bank actions. He also emphasizes the potential for selective mining stocks to outperform during this correction phase, suggesting a strategic window for investors to add exposure to the sector at lower levels. The key near-term risks include volatile trading and defensive positioning as markets digest inflation and policy signals. Traders should watch price reaction around $3,500 as a critical support level to gauge the depth of the correction and timing for re-entry. Central bank behavior remains a wild card influencing gold's trajectory. While the warning signals caution, the broader macro environment and long-term fundamentals keep the bullish gold thesis intact. This nuanced outlook underscores potential tactical pullbacks within an overarching upward gold trend.