Gold futures for April delivery opened Friday at $4,950 per troy ounce, marginally above Thursday’s $4,948.40 close but decisively below the psychologically significant $5,000 level. The move marks the first sustained break under that threshold since Monday, signaling a pause in what has been one of the strongest 12-month rallies in the metal in decades. The pullback comes amid broad weakness in U.S. equities and renewed volatility in technology shares tied to artificial intelligence concerns.

Equity Weakness and Cross-Asset Liquidations

Thursday’s equity session was marked by pronounced declines. The S&P 500 fell 1.6%, the Dow Jones Industrial Average dropped 1.3%, and the Nasdaq Composite slid 2%. The technology-heavy selloff amplified stress across leveraged portfolios, prompting margin-related adjustments.

Some analysts attribute part of gold’s decline to forced selling rather than a fundamental shift in outlook. When stock prices fall sharply, leveraged investors may face margin calls requiring them to liquidate assets, including gold, to restore account balances. This dynamic often creates short-term pressure even in traditional safe havens. Early Friday trading showed a modest rebound in gold, suggesting the prior session’s move may have been more technical than structural.

Momentum Remains Intact on a Broader Horizon

Despite the recent dip, gold’s longer-term performance remains robust. The metal is up 3.9% over the past week, 8.1% over the past month, and approximately 70% over the past year. Notably, as recently as January 29, gold’s 12-month gain stood near 95.6%, highlighting the scale of appreciation seen during periods of elevated inflation concerns, geopolitical uncertainty, and central bank demand.

For investors in both Israel and the United States, the question is no longer whether gold has delivered — it clearly has — but whether allocations should be adjusted following such extraordinary gains. The current environment combines equity volatility, persistent inflationary pressures, and questions around global monetary stability, all of which traditionally support gold’s role as a portfolio hedge.

Debate Over Optimal Allocation Intensifies

Expert opinions on gold allocation remain sharply divided. Some academics argue that even modest exposure may dilute long-term returns, particularly for younger investors with extended investment horizons. Others recommend tactical allocations ranging from 2% to 8%, citing gold’s volatility-dampening characteristics without materially impairing income generation.

More assertive advocates propose allocations between 5% and 15%, emphasizing gold’s resilience during economic dislocations and geopolitical stress. A minority camp recommends as much as 20%, particularly in physical gold or exchange-traded funds, framing the metal as a direct hedge against currency debasement and inflation.

The divergence reflects broader uncertainty in financial markets. Investors must weigh gold’s purchasing power preservation against the opportunity cost of reduced exposure to equities and growth assets.

Looking Ahead: Technical Pressure or Structural Shift?

With gold trading near multi-decade highs yet showing signs of technical weakness in the short term, market participants will closely monitor U.S. economic data, Federal Reserve policy signals, and equity market stability. If stock volatility persists, gold could regain upward momentum as a defensive allocation. Conversely, sustained risk-on sentiment may cap gains and encourage further profit-taking.

For now, gold’s retreat below $5,000 appears more indicative of portfolio rebalancing and liquidity dynamics than a reversal of its broader trend. Whether this marks a consolidation phase or the beginning of a deeper correction will likely depend on macroeconomic signals in the coming weeks.