BIT Research: After the Sudden Sharp Drop in Gold, Why Might It Instead Accelerate Towards $5,000?

The current market is undergoing a macro repricing phase dominated by the trajectory of the US dollar and the interest rate path. Although gold has experienced a notable correction recently, its overall bullish structure has not been disrupted. On the one hand, the market is re-pricing in the risk of a rate hike within the year; on the other hand, there is a widespread expectation that the next Fed Chair, Kevin Warsh, will lean dovish. This tension between the two forces suggests that the current market pricing of the interest rate path may be unsustainable. Once the market begins to correct this expectation, the US dollar could weaken again, and real interest rates may fall, thereby opening up further upside for gold.

From a trading signal perspective, quantitative models and trend models have both strengthened simultaneously in recent periods. Historical data shows that after similar signals were triggered over the past 10 instances, gold averaged an increase of approximately 12.8% in the subsequent two months, corresponding to a target price of roughly $5,306, with a historical win rate of around 70%. Meanwhile, the DXY has attempted to break above the 100 mark three times—in July 2025, November 2025, and March 2026—but failed each time, indicating that the dollar's rebound momentum is waning. Against this backdrop, this article argues that the current correction is more akin to a periodic adjustment rather than a trend reversal.

Repricing of the Dollar and Interest Rates: Gold's Core Logic Remains Unchanged

In the coming months, the most critical variable for gold remains the repricing of the US interest rate path. Powell has confirmed that the late April FOMC meeting will be his last as Chair, while the June 17 FOMC meeting will be Kevin Warsh's first since taking office. Warsh has repeatedly stated that the productivity gains brought about by AI have a deflationary effect, and the market generally expects his policy stance to be more dovish compared to the current one.

At the same time, however, the market has fully priced out any expectation of a rate cut this year and has even begun to price in a rate hike. This pricing logic itself contains a clear contradiction. If the June dot plot begins to counter the current expectation of "one rate hike within the year," gold could quickly reprice upwards. The September 16 FOMC meeting is also seen as a key window, as historically, after rate cuts in September 2024 and 2025, both gold and Bitcoin saw significant appreciation.

Meanwhile, US debt expansion and fiscal pressures are also reinforcing gold's long-term narrative. The current US national debt has reached $39 trillion, an increase of approximately $2.7 trillion since the passage of the "Big and Beautiful Bill" in July 2025. Gold has corrected, but the debt has not contracted. Once the market shifts back to a liquidity and fiscal expansion logic, gold is likely to challenge its all-time highs again.

Technical Structure and Capital Flows Both Improve: Gold May Enter a New Upward Phase

From a technical perspective, gold's current structure remains positive. During this adjustment phase, gold prices found clear support in the $4,300 to $4,400 range, and further raised the low in early May, stabilizing around $4,500. The continuously rising lows indicate that the bullish structure remains intact. Gold is currently consolidating within a narrow symmetrical triangle pattern. Once it breaks out to the upside, it is likely to challenge its previous all-time highs again.

Looking at historical patterns, gold has long exhibited a rhythm of advancing in roughly $1,000 increments. Therefore, $5,300 could be a reasonable target for the next phase, while $6,300 may become a potential target later this year or next. Additionally, several catalysts are approaching in the coming months, including the "Trump-Xi" meeting in May, the June FOMC meeting, the BRICS summit in July, and the US fiscal cliff in September. As the market begins to reprice the dollar, interest rates, and liquidity paths, gold's relative advantage could strengthen further.

Overall, although this gold correction has been significant in magnitude, its trend structure has not been broken. A weakening dollar, the repricing of interest rate paths, global reserve diversification, and US fiscal pressures are gradually forming a new macro confluence. At the same time, quantitative models and trend models have strengthened simultaneously, and several key catalysts are set to materialize in the coming months. For the market, the key question at this stage is no longer just short-term inflation fluctuations, but when the market will shift back to a logic of liquidity and policy easing. Once this process begins, gold could enter a new phase of accelerated upward movement.

The views above are partially sourced from BIT on Target. Contact us to get the full BIT on Target report.

Disclaimer: The market carries risks, and investment requires caution. This article does not constitute investment advice. Digital asset trading may involve significant risks and volatility. Investment decisions should be made after carefully considering personal circumstances and consulting with financial professionals. BIT is not responsible for any investment decisions made based on the information provided in this content.