Veteran trader Peter Brandt says gold's weekly chart is forming a head-and-shoulders pattern. If the support zone between $4,100 and $4,200 an ounce gives way, the chart could point to a further decline toward $2,890. Brandt stressed that this is a technical scenario, not a price forecast, and that the pattern may not play out. Continued gold buying by the People's Bank of China could also provide support.
$4,100-$4,200 Zone Becomes the Key Test
A head-and-shoulders pattern typically consists of three peaks, with the middle peak standing highest. Traders often view it as a sign that upward momentum is weakening. Brandt said a break below the pattern's neckline could strengthen selling pressure, leaving a potential chart target of $2,890 an ounce.
That target is well below the current gold price. Traders generally look for a close below the neckline rather than treating the appearance of the pattern alone as confirmation of a downtrend. Brandt also cautioned that technical charts cannot determine market direction on their own. Broader market conditions will continue to influence prices, and gold may not follow the classic pattern as expected.
Gold Is About 22% Below Its January Record
Gold was trading at about $4,194 an ounce on October 10, roughly 22% below its January record near $5,405. Although prices rose on Friday, gold was still down about 4% for the year. The metal has recently traded within a wide range as investors reassess expectations for U.S. interest rates.
Shifting rate expectations and rising U.S. Treasury yields have been central to the recent volatility in gold. A further change in the market's view of the interest-rate path could create additional pressure on prices. However, the current chart pattern alone does not establish that such pressure will develop into a sustained decline.
China’s Central Bank Buying Offers a Counterweight
The People's Bank of China bought 740,000 ounces of gold during the month, its largest monthly increase since 2023. The buying extended the central bank's purchasing streak to 23 consecutive months. Official-sector demand has therefore become an important factor in assessing gold's fundamentals and could offer some support during a pullback, although it cannot be assumed to offset the downside risk indicated by the technical pattern.
Gold's trading range in 2026 is expected to be the widest since 1982. Changes in expectations for Federal Reserve rates and higher U.S. Treasury yields have both contributed to the market's repricing of the metal. Traders will now focus on whether support near $4,100-$4,200 holds and whether Chinese central-bank demand continues. Whether the head-and-shoulders pattern ultimately completes to the downside remains unresolved.