Gold price history in the past two decades shows that strong increases often come with deep correction periods afterwards. The recent increase from September 2022 to January 2026 is a typical example when gold prices increased by 245%, from about 1,621 USD/ounce to a record level of 5,594.82 USD/ounce.
However, previous cycles showed that after hot waves of increase, gold often goes through prolonged periods of price decline to consolidate a new level. From a bottom of 697.45 USD/ounce in October 2008, gold increased by 170% to 1,884.40 USD/ounce in September 2011 before falling 37%, to 1,191.35 USD/ounce in August 2018.
Then, from this bottom, the precious metal continued to increase by 74% to $2,072.49/ounce in August 2020 and then adjusted 22%, to $1,620.20/ounce in September 2022.
The noteworthy point is that the larger the increase, the deeper the subsequent adjustment phase is usually. In addition, price increases often take place in a much shorter period of time than the adjustment and accumulation process.
Since its historic peak on January 29 this year, gold prices have fallen by about 20%, to around 4,470 USD/ounce. Compared to previous cycles, this adjustment is still relatively modest, especially as gold has more than tripled in just over three years.
This shows that although profit-taking pressure appeared after a period of hot increase, the market is still maintaining most of the achievements of the strongest price increase cycle in decades.
The Fed is holding the key to the gold market
After many weeks of unfavorable trading, gold suddenly surged sharply in the June 4 session when the price increased by about 40 USD/ounce, from the 4,465 USD zone to over 4,500 USD/ounce. This is the strongest one-day increase for the precious metal in many weeks.
This recovery momentum helped gold regain the 4,500 USD/ounce threshold - an important resistance level that has repeatedly hindered the market's recovery efforts in the past month.
Technical analysts believe that gold has formed a two-bottom pattern around the 4,425 USD/ounce zone before rebounding. However, to confirm a new upward trend, the price needs to remain stable above the 4,530 USD/ounce zone.
Although short-term fluctuations still appear, more and more experts believe that the decisive factor for gold is no longer physical supply and demand but the monetary policy expectations of the US Federal Reserve (Fed).
Recent economic data shows that the US labor market still maintains quite good resilience. The ADP report and JOLTS recruitment data both exceeded expectations, causing the market to continue to narrow the possibility of the Fed early cutting interest rates.
Ms. Beth Hammack - President of the Federal Reserve Bank of Cleveland said that the possibility of raising interest rates is still being considered if inflationary pressure continues to persist.
This explains why gold still has difficulty building a sustainable upward trend even though many long-term supporting factors have not changed.
High interest rates increase the opportunity cost of holding gold - an asset that does not yield yields. Conversely, any sign that the Fed is getting closer to a policy easing cycle could become a catalyst for a new rally.
Many experts currently predict that gold may fluctuate in the range of 4,300 - 4,725 USD/ounce in June. If US economic data shows that growth and jobs cool down, interest rate prospects may become more favorable for the precious metal.
The central bank is still the biggest foothold
Although gold prices have fallen by about 20% since their historic peak, the fundamental factors supporting the market have not disappeared.
According to data from the World Gold Council (WGC), central banks net bought about 244 tons of gold in the first quarter of 2026, up 3% compared to the same period last year and continuing to maintain the gold accumulation trend.
Although the accumulation rate is no longer as explosive as in the 2022-2024 period, central banks still maintain high gold buying activities, thereby continuing to support the market.
Meanwhile, physical gold demand remains high. Demand for gold bars and gold coins in the first quarter reached nearly 398 tons, an increase of about 50% compared to the same period last year, reflecting the safe asset accumulation psychology of individual investors.
However, some cooling signals have also appeared. Jewelry demand in China fell 31% in the first quarter to 85.2 tons, while India fell 19% to 66.1 tons. Globally, jewelry demand fell 25%.
Capital inflows into gold ETF funds are also no longer as strong as in the previous period. Capital inflows into gold ETF funds in the first quarter decreased sharply compared to the same period last year, showing that a part of institutional investors are more cautious after a period of hot growth.
However, it was the persistent buying activity of central banks that helped gold avoid deep corrections like previous cycles.
That is also the reason why many experts believe that the decrease of about 20% from the current historical peak has more characteristics of a period of consolidation and accumulation than the end of the long-term uptrend.
In the short term, the gold market will still be greatly affected by US economic data, especially inflation and employment. But in the long term, the demand for gold accumulation of central banks and the role of preserving gold value are still important foundations to support the market.
Therefore, the biggest question at this time is probably not whether gold has peaked or not, but how long will the market need to absorb all the adjustment pressure before entering a new growth cycle.
