Gold looks more likely to claw back to $4,500 an ounce by the end of the year than to slide to $3,500, according to bank forecasts and betting markets.
The metal fell 2.8% to $4,157 an ounce on Monday, and a drop to $4,100 now looks close to certain.
The bigger question is whether the sell-off turns into a rout or a buying opportunity.
The case for $4,500
The big banks mostly expect a recovery.
Year-end targets cluster between roughly $4,500 and $4,900, with Goldman at $4,900, J.P. Morgan at $4,500, HSBC at $4,750, UBS at $4,600 and Morgan Stanley at $4,450.
Goldman reaffirmed its target last week, still seeing net upside risk to its $4,900 year-end forecast but warning of greater two-sided volatility along the way.
The main support is buying by central banks, which have been diversifying away from the dollar.
UBS goes further, and treats pullbacks toward $4,000 as a buying opportunity rather than a reversal signal.
Nick Cawley, contributing analyst at bullion dealer Solomon Global, takes a similar line, saying longer-term investors may see value around $4,000.
The case for $3,500
The bear case rests on the Federal Reserve.
Goldman's forecast assumes the Fed remains on hold in 2026, but markets now price in up to 100 basis points of rate rises by mid-2027.
In a scenario where the Fed keeps raising rates, Goldman's explicit hike case is $4,400 by year-end, still well above $3,500.
Rates matter because J.P. Morgan estimates gold moves roughly $20 an ounce for every 1 basis point rise in 10-year real yields.
Valuation offers another warning, with the World Gold Council's fair-value framework putting gold at roughly $3,895 to $4,305, below where it traded at the time.
What the betting says
Polymarket, the prediction market, broadly agrees with the banks.
Traders put a 12% chance on gold futures falling to $3,500 by the end of December.
Before Monday's fall, they gave a 22% chance of gold touching $4,000 in October, although that market has barely traded.
What to watch
The next test comes this week, with US PCE inflation data on Wednesday and the jobs report on Friday.
After that, the focus shifts to the Fed meeting on 27 and 28 October.
A hot inflation reading or strong payrolls could push gold through $4,000 within weeks.
A softer set of numbers would bring the banks' $4,500 year-end targets back into view.
