Gold Price Forecasts for February: Correction and Rally Scenarios Amid Dollar Strength and Geopolitical Risks

The gold market is currently experiencing a pivotal phase that will determine whether it faces a deep corrective pullback or a temporary correction within a longer-term uptrend. This comes amid multiple pressures combining a rising dollar, a decline in geopolitical risk premiums, and a broad sell-off across global markets. Current gold price expectations reflect this clear split between short-term pressures and positive medium- to long-term outlooks, making this stage critical for understanding the metal’s trajectory in the coming weeks.

The New Pricing Equation: How a Strong Dollar Reshaped the Market Landscape

The US dollar plays a central role in shaping gold’s direction at this time. The dollar index has risen near two-week highs, supported by political and monetary developments that have restored confidence in the greenback. In this context, gold becomes more vulnerable to downward pressure even without fundamental changes in its core fundamentals. A rising dollar increases the cost of holding gold priced in dollars for investors outside the US, reducing its relative attractiveness and prompting a reduction in positions.

The dollar’s rally has been amplified by Kevin Worch’s nomination for a major economic role, known for his relatively hawkish views on monetary policy, giving the dollar an additional boost in the markets. In an environment highly sensitive to US currency movements, even a slight improvement in dollar appeal can redirect investment flows away from gold, especially as dollar strength occurs amid low liquidity, deepening negative impacts and making moves more volatile than usual.

The influence of a strong dollar on gold is not limited to one dimension; it also restores the dollar’s role as a temporary safe haven during market turbulence, creating direct competition with the precious metal for short-term hedging flows. This limits gold’s ability to maintain its upward momentum in the near term.

Easing the Risk Premium: Geopolitical Developments Dampen Hope

Recent geopolitical developments have played a decisive role in reducing the risk premium that previously supported gold. The US and Iran announced agreement to hold talks in Oman, which markets interpreted as an effort to contain rather than escalate tensions. Although this shift may seem fragile on the surface, it was enough to partially reprice geopolitical risks and reduce immediate demand for safe-haven assets.

Additionally, positive signals regarding US–China relations—such as talks described as “positive” and the possibility of increased Chinese purchases of American agricultural products—added a calming element to the markets. In such scenarios, gold does not need outright negative news to decline; the absence of sharp geopolitical triggers that drive investors toward defensive hedging is sufficient.

The Broad Sell-Off: A Comprehensive Portfolio Rebalancing

Pressure is not limited to gold alone but extends to a wider sell-off affecting global markets, including regional equities, cryptocurrencies, and some defensive assets. This pattern reflects a phase of broad portfolio rebalancing rather than targeting a specific asset.

This wave is fueled by multiple concerns, including rising costs of investing in AI sectors and their impact on profit margins and high valuations of tech firms. These fears have prompted investors to reduce exposure across various asset classes in search of liquidity and to lower leverage.

Limited Liquidity: Amplifying Volatility and Feedback Loops

Weak liquidity plays a crucial role in magnifying recent market swings, especially in gold. Trading in a limited liquidity environment creates strong negative feedback loops: losses in one asset class generate simultaneous pressures elsewhere, making price movements less about fair value and more driven by forced flows.

This liquidity shortage accelerates profit-taking and triggers stop-loss orders, worsening declines even without strong fundamental catalysts. Investors tend to adopt a short-term defensive approach, reducing exposure rather than rebuilding positions. In the near term, this means gold remains vulnerable to sharp swings in either direction until markets regain some balance.

Technical Analysis: Critical Tests and Key Levels

Last week, gold entered a more sensitive technical phase, transitioning from a “violent rebound” to a genuine test of deep re-pricing zones—one of the most intense consecutive breakdown and rebound moves since the global financial crisis.

Currently, the metal is moving within a tight consolidation range on the two-hour chart, reflecting a clear struggle between attempts to resume the uptrend and pressures to reset positions. The price approaches the 4,950–5,100 USD zone, which represents the previous “breakout neck” and a pivotal battleground. Stability above this range is essential to turn the rebound into a more sustainable upward trend.

The 5,320 USD level acts as a subsequent technical resistance, stemming from a prior breakout that has become a sideways barrier. Conversely, the 4,600 USD level remains a critical psychological and technical support, followed by the 4,400–4,300 USD zone, representing the current lows and a safety valve for medium- to long-term direction.

Momentum and Technical Support Indicators

The MACD shows a gradual improvement in momentum after the crash, with red bars clearly shrinking and an early positive crossover forming between the MACD line and signal line. This suggests a selective return of buying interest but requires confirmation through actual price breakouts above current resistance levels.

The Relative Strength Index (RSI) has stabilized near 48 after a sharp decline from oversold levels above 80, indicating the market is exiting an extreme imbalance and beginning to build a more balanced price base. This neutral stance reflects no clear dominance by either bulls or bears, making the next move highly dependent on breaking key levels.

Trading Strategy: Possible Scenarios and Critical Levels

The preferred technical scenario is to wait for the price to stabilize above the 4,950–5,100 USD zone before considering further upside. If gold manages to turn this area into support, it could open the way toward 5,320 USD and eventually retest the all-time high in multiple stages.

If, however, the price fails to break through this zone and new selling pressures emerge, the 4,600–4,400 USD range will serve as a critical re-evaluation zone, likely acting as the last defensive barrier before a deeper shift in the long-term trend.

Key Technical Levels:

Financial Institutions’ Gold Price Outlooks: Divergent Yet Optimistic

Despite short-term pressures, major financial institutions maintain positive outlooks for gold’s trajectory through 2026, with varying price targets reflecting different degrees of optimism.

JPMorgan remains optimistic, projecting gold reaching around $6,300 per ounce by the end of 2026, supported by continued central bank purchases and diversification away from the dollar. The bank notes that official demand from central banks could approach 800 tons annually, providing structural price support.

UBS, with a less optimistic but still bullish stance, expects gold to move within the $6,100–6,200 range in late 2026, viewing current corrections as natural within a primary uptrend rather than a structural reversal.

Deutsche Bank suggests gold could target levels close to $6,000 by year-end, driven by ongoing institutional demand and hedging against global growth slowdown risks.

In the shorter term, and within tactical ranges, independent analysts and regional banks estimate gold could fluctuate between $4,800 and $5,400 per ounce over the coming weeks, with the trend within this range primarily influenced by three key factors: the dollar’s path, monetary policy decisions, and global risk appetite stability.

Upcoming Economic Events: Key Drivers of the Path

Several pivotal upcoming economic events could significantly influence gold price expectations:

Bank of England’s interest rate decision: A more cautious stance or signals of a potential rate cut later would support gold by weakening the pound and boosting safe-haven demand.

US unemployment claims data: An important test of US labor market resilience; unexpected increases could reinforce recession bets and weaken the dollar, positively impacting gold.

European Central Bank policy decisions: Announcements on eurozone interest rates and policy statements could affect the euro and bond yields, with a cautious tone increasing gold’s appeal as a hedge.

Summary: A Balanced View of the Gold Market

Gold price forecasts show a clear split between short-term pressures and a positive medium- to long-term outlook. The current phase is more about re-pricing and a temporary correction within a long-term uptrend rather than a fundamental reversal.

Structural supports—central bank buying, inflation concerns, and currency devaluation—remain intact throughout 2026. However, markets are now in a portfolio rebalancing phase requiring patience and technical confirmation before expecting sustained gains.

For traders and investors, the message is clear: this stage is crucial and could shape the first half of 2026, especially given markets’ high sensitivity to dollar movements, monetary policy, and geopolitical developments. Clear technical signals are needed before building long-term positions, and caution is advised against sharp moves amplified by limited liquidity.