Financial markets have a habit of testing investors’ conviction. When an asset pauses after a strong rally, the immediate narrative often shifts from optimism to skepticism. Gold is experiencing one such phase today.
Following a sharp correction from its January highs, gold has spent the past several weeks consolidating rather than extending its decline. To some, the subdued price action may suggest that the bull market has run its course. Yet history reminds us that healthy bull markets rarely move in a straight line. More often, they pause, digest gains and rebuild momentum before the next leg higher.
The more important question, therefore, is not where gold has been over the past few weeks, but whether the structural forces that drove the rally have materially changed. On that count, the evidence suggests they have not.
Daily Gold Chart (RSI Bullish Divergence)
