The price of gold found some resistance at the $3,341 level after a small rebound in the US dollar.
The gold resistance has the precious metal trading at $3,370 and could mount a larger correction toward the $3,300 level.
Gold’s pause is coming despite the worst start to a year for the greenback since 1986. It is also surprising that the threat of a US involvement in Iran has not pushed gold higher.
The precious metal’s rally may be at an end, according to a commodities expert who predicts a drop late next year to well under US$3,000 an ounce.
Max Layton, commodities head at CITI Research, predicts gold will be around $2,500 to $2,700 in the second half of next year, which would be a drop of around $900.
“Our call is very much a 2026 bearish gold call,” Layton told Bloomberg. “Near term, we have it averaging around $3,200 in the third quarter and $3,000 in the fourth quarter.”
Gold is up by more than 70 per cent over the past two years, and Layton has been bullish on gold for the last couple of years. He said many are buying gold due to risks over their household wealth, due to a slowing economy and global uncertainty.
“The move from $2,600 to $3,300 this year has been all about investors buying bars and coins, particularly bars because they’re hedging against a downside in US and global growth, as well as a downside in equities related to that downside in US and global growth, which has come about because of the combination of still extremely high interest rates in the US by historical standards, and the tariffs”.
However, he now sees a drop in prices due to weakening demand, anticipated US interest rate cuts and improved economic prospects.
“We’re getting close to this One Big Beautiful Bill Act passing Congress,” said Layton. “We think that is going to mark a shift in sentiment towards US growth and basically a slight reduction, or even a moderate reduction, or even possibly by the end of next year, heading into the midterm elections with lower interest rates as well”.
This bill would be net stimulatory for the US economy, is going to reduce fears about growth and lead to a bit more positivity and a little less investment buying of gold,” said Layton. “With that, you basically unwind the primary driver of the last $700 move in the old price higher from $2,600 to $3,300”.
