If Gold Breaks Below $3900 Watch Out, But Florian Grummes Sees Massive Reversal Coming
In a recent interview on CapitalCosm, technical analyst Florian Grummes of Midas Touch Consulting laid out a clear roadmap for gold and silver after an eight week correction that has already knocked more than $700 off gold prices.
Grummes pointed to the broad zone between $3900 and $4050 as critical support, noting that previous lows in this area held during earlier pullbacks. He warned that a decisive break below $3900 would activate a descending triangle pattern and serve as a very negative signal for the metal.
In that scenario he expects an initial bounce toward $4300 or $4500 before a potential deeper move lower by next spring.
Grummes stressed that gold is already oversold on both the daily and weekly charts and that panic sentiment is building, which he views as a contrarian setup. He anticipates a turning point around the second week of December, tied to the final Federal Open Market Committee meeting of the year, followed by seasonal strength into January, February, and March.
Chinese New Year demand in mid February should provide an additional boost. April, May, and June remain historically weak months where the horizontal support could finally give way if the bearish path plays out. He dismissed fears around synthetic or space based gold production, stating that mining it in an economically viable way is a completely different story and that nobody would invest $600,000 to produce one ounce currently trading near $4000.
On silver, Grummes highlighted the $50 level as major historical support dating back to the 1980s, with the broader zone between $45 and $55 representing a very strong support area. Silver is significantly oversold and may see another three or four dollars of downside in the short term, but he expects the $50 region to hold and views any brief dips as opportunities for the market to breathe. A clear weekly close below $50 would signal a much deeper downturn, yet he remains confident the overall pattern stays intact even if prices briefly reach $45. He sees both metals forming a bottom over the coming weeks into mid December, after which a powerful recovery should begin.
Grummes also touched on related markets, noting elevated oil prices with an upward breakout potential toward $150 next year and no reason to sell oil shares. Stock markets have pulled back, with the Nasdaq off roughly 6 percent, but he expects a year end rally once midterm election uncertainty clears. Bond yields have eased from recent highs, and he believes the recent rise in yields is near a phase peak.
Overall, Grummes sees the worst of the metals correction as probably behind us, with reverse buyers likely to step in below $4000 in gold over the next several weeks. The setup remains constructive for those prepared to ride out near term volatility into the seasonal strength expected later this year and into early 2027.
