Paul Wong: Gold is oversold and poised for a cyclical bottom

Wong points to multiple technical indicators showing that gold has fallen well below its 200-day moving average, with several metrics suggesting it is between two and three standard deviations oversold. While technicals are rarely precise in timing a market floor, the data suggests that the bulk of selling pressure has exhausted itself. Historical patterns indicate that gold often finds its seasonal low in late summer, with events like the Jackson Hole symposium frequently serving as the pivot point for a broader trend reversal.

The real driver for the metal, however, remains the volatility in the global bond market. With U.S. debt ballooning to 39.5 trillion dollars and interest expenses now exceeding military spending, the Federal Reserve faces a narrow path. As global economies de-globalize and supply chains duplicate, inflationary pressures are becoming structural. Wong contends that central banks are trapped: they must either lose control of the bond market or resort to currency debasement to finance ballooning deficits. This structural necessity for debasement acts as the ultimate long-term floor for gold prices, regardless of short-term volatility or Federal Reserve rhetoric.