What's behind the selloff in gold and silver?

Market Analysis & Gold's Valuation - Gold is significantly extended versus moving averages, suggesting a potential 20-25% drawdown from its peak would be normal [1] - The rapid increase in gold's price is concerning, especially when other markets underperform, indicating potential market instability [2][3] - Gold's high valuation suggests it is overbought, and investors should not be actively seeking to buy it [7][8] - Central banks may curtail their gold buying around $4,000/ounce due to elasticity, impacting market dynamics [6][7] Economic Indicators & Potential Risks - Gold's behavior may signal upcoming stock market volatility, as indicated by low 90-day volatility volume of 89% a few weeks ago, the lowest in five years [3] - Declining crude oil prices and bond yields, coupled with potential stock market declines, could accelerate existing trends, suggesting deflationary risks [4][3] - The increase in total gold reserves held by central banks surpassing US dollar reserves is partly due to the price increase [9] Technical Analysis & Support Levels - In 2006, gold corrected about 25% after stretching above its 200-day moving average, before resuming its upward trend [11] - A normal correction from the current extreme gold price would be around 20%, targeting a support level of $3,500, which was the previous peak [13] - While $4,000 is the first dip, it's not near the normal correction range of 20-30% for such a stretched market [14]