Brandt flags head-and-shoulders pattern, gold could drop to $2,890

Peter Brandt, a seasoned trader, has cautioned that the price of gold might experience a steep drop following his identification of a bearish formation on its weekly chart.

The head-and-shoulders pattern typically emerges when a strong uptrend starts to fade. It is characterized by three peaks, the tallest of which is the middle one.

Gold Price Chart Points to a Major Risk

According to Brandt's chart, gold could drop to around $2,890 if it breaches the critical support area between $4,100 and $4,200. That would indicate strengthening control by sellers.

However, Brandt emphasized that the chart does not constitute a price forecast and that a decline is not guaranteed. Ongoing buying by the People's Bank of China could also provide price support.

This is NOT a prediction, but stranger things have happened over my five decades$GC_F $XAU pic.twitter.com/cEM0xN6VqM

— The Factor Report (@PeterLBrandt) October 9, 2026

That target is well below current levels, making any such decline significant. Many traders typically wait for a weekly close below the neckline before taking action.

Investors should consider the chart alongside broader market factors instead of depending on a single pattern. This approach is important since markets seldom comply with textbook formations.

Can China’s buying offset a deeper gold correction?

Gold was trading near $4,194 an ounce on October 10, roughly 22% below the record high of about $5,405 reached in January.

After Friday's advance, the metal posted a small gain but is still down roughly 4% year-to-date. It has been moving within a broad range as investors re-evaluate expectations for US interest rates.

#Commodities: #Gold trades near USD 4,200, recovering from a challenging week that saw prices fall to a two-month low as bond yields surged to fresh multi-year highs. The rebound has been supported by a recovery in US Treasuries following a well-received 30-year bond auction,… pic.twitter.com/NXRvJrILOU

— Ole S Hansen (@Ole_S_Hansen) October 9, 2026

Nonetheless, the People's Bank of China added 740,000 ounces during that month, its biggest monthly purchase since 2023. That streak of accumulation now spans 23 consecutive months.

According to a BeInCrypto report, 2026 is set to become the most volatile year for gold since 1982. Much of that volatility is driven by changing Federal Reserve rate expectations and climbing Treasury yields.

Brandt's chart points to the potential for a more severe correction. Meanwhile, central bank demand continues to provide underlying support.

In the coming weeks, investors will monitor whether the neckline holds. It remains uncertain whether the pattern will complete to the downside or fail.