Gold and silver are both selling off hard today, and one chart strategist says the drop isn’t over yet. Gareth Soloway, chief market strategist at Verified Investing, says rising tensions in the Middle East are pushing the US dollar and interest rates higher, as oil prices climb. Higher oil tends to push inflation expectations up too, which lifts rates further. That combination is putting direct pressure on both metals.
Gold dropped 1.5% on the day, while silver also took a hit.
Gold’s Chart Is Flashing a Warning
Soloway points to a wedge pattern forming on gold’s chart, where price is getting squeezed between a descending resistance line and a rising support line. Each bounce off support has failed to reach the upper resistance trend line, a sign he says shows continued weakness. Gold recently bounced off support near $4,000, and that level is now back in focus.
Below that, Soloway is watching the $3,975 zone as the next line in the sand. A break there, he says, opens the door toward a deeper pullback.
Where Gold’s Correction Could End
Looking at past cycles, Soloway says gold fell 66% from its 1980 peak, then 46% during its 2011 top. Each cycle has produced a shallower drawdown than the one before, tied to rising government debt and ongoing quantitative easing.
Applying that pattern, he expects a roughly 30% to 37% drawdown from gold’s recent high this cycle, which would put the bear market low near the $3,500 level.
A Longer-Term Bull Case Beyond the Pullback
Despite the near-term weakness, Soloway remains bullish on gold’s next multi-year cycle. He said gold’s bear markets have shortened over time, from 30 years following the 1980 peak to 15 years after the 2011 peak. That pattern suggests the next cycle top could arrive within roughly five years.
Based on a model he’s built, Soloway projects gold’s next bull market high could land somewhere around $13,000, though he stresses this is a longer-term projection rather than a near-term target.
Silver’s Setup Looks Similar
Silver is forming what Soloway describes as a bear flag, having broken below key support levels before rejecting a retracement attempt. He’s watching the $58 level closely. A break below that could open a path toward $54, and potentially as low as $50 or $46 if selling accelerates further.
Silver has already dipped close to the $54 to $55 zone, near the upper end of his projected drawdown range, though Soloway says one more leg lower remains possible before a bottom fully forms. Once that downside plays out, he says a break above the descending resistance trend line would mark the start of a bigger move higher for silver.
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