Market Correction in Metals Continues, Will a Reversal Happen?

The metals market is experiencing a significant wave of selling. Earlier this week, trading in the Asian region continued to face downward pressure, extending the decline that began last week. This volatility reflects a market pattern that has occurred frequently before—rapid and substantial corrections.

Metal Decline Wave Begins in the Asian Session

According to a report from Odaily, Michael Brown, a strategist at Pepperstone, analyzes that the current metal price adjustments align with a historical market pattern characterized by sudden price drops. Brown suggests the possibility of a “dead cat bounce”—a temporary recovery before further pressure—in the near future. This pattern typically occurs when overly speculative positions are being cleared from the market, creating room for minor technical rebounds before fundamental factors regain dominance.

Temporary Recovery Signals Amid Precious Metal Pressure

Although metal prices continue to be pressured, Brown maintains a constructive outlook for the long-term prospects. This optimism is based on solid fundamentals, particularly strong demand from global central banks and the retail sector, which continues to buy. These factors indicate that interest in precious metals remains deep, driven by their hedging value.

Why Metals Remain a Hedge Investment Choice

Amid geopolitical uncertainties and currency volatility, metals continue to be a primary defensive instrument for investors. This demand is driven by two main reasons: first, as protection against fluctuations in the US dollar; second, as an alternative to US Treasury bonds, which currently offer unattractive returns. The combination of these factors keeps metals relevant in diversification strategies.

Key Question: When Will the Metal Market Stabilize?

The market focus is now shifting to a fundamental question: has the correction been sufficient to remove excessive speculation from the system? Once speculative positions are adequately cleared and the psychological bubble has deflated enough, economic fundamentals will resume driving metal prices. If this condition is met, a more sustained recovery could begin. Meanwhile, investors should remain cautious of technical bounces that might confuse the long-term trend direction of metals.