BIT Research: Why might gold surge to $5,000 faster after a sudden drop?

The current market is in a macro repricing phase dominated by the dollar's movements and interest rate paths. Although gold has recently experienced a significant pullback, the overall bullish structure has not been damaged. On one hand, the market is re-evaluating the risk of interest rate hikes this year, while on the other hand, there is a general expectation that the next Federal Reserve Chair, Kevin Warsh, will adopt a more dovish policy stance. The tension between these two factors suggests that the current pricing of interest rate paths may be difficult to sustain. Once the market begins to correct this expectation, the dollar may weaken again, and real interest rates are expected to decline, thereby reopening upward space for gold.

From the trading signals perspective, both quantitative models and trend models have recently strengthened in sync. Historical data shows that after the last 10 similar signals were triggered, gold averaged a gain of about 12.8% in the following two months, corresponding to a target price of approximately $5,306, with a historical win rate of about 70%. Meanwhile, the DXY has attempted to break through the 100 level three times in July 2025, November 2025, and March 2026, but has failed each time, indicating that the momentum for a dollar rebound is weakening. In this context, this article believes that the current pullback is more akin to a phase adjustment rather than a trend reversal.

Dollar and Interest Rate Repricing: The Core Logic of Gold Remains Unchanged

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

However, at the same time, the market has completely eliminated the expectation of interest rate cuts this year and has even begun to factor in a rate hike. This pricing logic itself has obvious contradictions. If the dot plot in June begins to contradict the current expectation of "one rate hike this year," gold may quickly reprice. The FOMC meeting on September 16 is also viewed as a critical window; historically, after rate cuts in September 2024 and 2025, both gold and Bitcoin experienced significant increases.

At the same time, the expansion of U.S. debt and fiscal pressure is also reinforcing the long-term logic for gold. Currently, the U.S. debt has reached $39 trillion, an increase of about $2.7 trillion since the "Inflation Reduction Act" was passed in July 2025. Gold has pulled back, but debt has not contracted. Once the market returns to the logic of liquidity and fiscal expansion, gold is expected to challenge historical highs again.

Technical and Funding Structure Improvement: Gold May Enter a New Upward Phase

From a technical perspective, the current structure of gold remains positive. During this adjustment, gold prices have received significant support in the $4,300 to $4,400 range and have further raised the low points in early May, stabilizing around $4,500. The continuous rise in low points indicates that the bullish structure is still intact. Gold is currently in a narrow triangular convergence pattern, and once it breaks upward, it is likely to challenge previous historical highs again.

Historically, gold has shown a long-term rhythm of advancing by about $1,000, so $5,300 may become a reasonable target for the next phase, while $6,300 could be a potential target later this year or next year. Meanwhile, several catalytic factors are gradually approaching in the coming months, including the May meeting between "Trump and Xi," the June FOMC, the July BRICS summit, and the September U.S. fiscal cliff. As the market begins to reprice the dollar, interest rates, and liquidity paths, gold's relative advantage may further strengthen.

Overall, although the current pullback in gold is significant, the trend structure has not been damaged. The weakening dollar, repricing of interest rate paths, global reserve diversification, and U.S. fiscal pressure are gradually forming a new macro resonance. At the same time, quantitative models and trend models have synchronized in strengthening, and several key catalytic factors will continue to materialize in the coming months. For the market, the key at this stage is no longer just short-term inflation fluctuations, but when the market will return to the logic of liquidity and policy easing. Once this process begins, gold may re-enter a new phase of accelerated upward movement.

Some of the views above are from BIT on Target. Contact us for the complete report from BIT on Target.

Disclaimer: The market has risks, and investment requires caution. This article does not constitute investment advice. Trading in digital assets may carry significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. BIT is not responsible for any investment decisions made based on the information provided in this content.