Bank of America technical strategists have warned that gold’s correction could extend considerably further.
The bank compared the current market structure with the major gold peaks of 1980 and 2011, both of which were followed by prolonged bear markets. Its preferred buying strategy does not reach full allocation until gold falls into the $3,450 to $3,250 range.
BofA Identifies Several Bearish Gold Signals
In a technical research report, Bank of America highlighted several indicators that could point to a longer decline in gold prices.
These signals include a bearish death cross, elevated net-long positioning, a concerning peak candlestick, a TD Sequential exhaustion signal, and an extremely high Relative Strength Index reading.
Gold’s RSI reached 90 near its recent peak. According to BofA, similar overbought readings appeared around the major market tops of 1980 and 2011.
Gold Correction May Still Be Too Short
Strategists led by Paul Ciana noted that the current correction has lasted only 24 weeks. By comparison, the preceding rally continued for 121 weeks.
Gold has already moved below the 38.2% Fibonacci retracement level at $4,149. However, BofA believes the duration of the decline remains relatively short compared with the length of the previous advance.
This suggests that the correction could continue even after gold breached an important technical support area.
XAU/USD has fallen 7.5% since the beginning of the year. The precious metal was also down as much as 16.8% during the previous three months.
Historical Gold Bear Markets Signal More Downside
Bank of America reviewed the three major gold bear markets recorded since 1970.
Each decline erased at least 50% of the previous upward move.
Should 2026 become a long-term market peak similar to earlier cycles, BofA estimates that gold could fall towards approximately $3,315.
Key Gold Price Targets to Watch
A separate analysis based on a 174-week historical period identified $3,605 as another possible downside target.
Meanwhile, the 50% Fibonacci retracement of the previous full rally is located near $3,702. Bank of America considers this an important target during any deeper phase of the correction.
These levels suggest that gold could remain vulnerable even after its recent decline.
Gold Could Rebound Before Falling Further
BofA does not expect gold to move directly towards its lower targets without interruptions.
Ciana believes gold could first recover towards the $4,325 to $4,500 region. That rebound could then be followed by another decline towards the 50% retracement level near $3,702.
Such a move would represent a countertrend rally within a broader bearish structure.
A similar pattern developed following gold’s 2011 peak, when temporary recoveries occurred before the market continued lower.
Second Half of 2026 Could Carry Greater Risk
Bank of America believes gold may face increased pressure during the second half of 2026.
The outlook depends on whether the current decline becomes the beginning of a prolonged bear market or remains a temporary consolidation within a larger uptrend.
Should the historical comparison remain valid, the correction could last longer and reach considerably lower price levels.
BofA Recommends a Staged Gold Buying Strategy
Despite its cautious outlook, Bank of America is not advising investors to avoid gold completely.
Instead, the bank recommends gradually increasing exposure as prices decline.
BofA supports modest accumulation below $4,000. It sees the $3,700 to $3,600 region as a more attractive area for adding positions.
The bank would favour reaching a fuller gold allocation only if prices fall into the $3,450 to $3,250 range.
