Gold Price Outlook: Options Sentiment Extreme as Bears Target $4,800

By Matt Simpson, Market Analyst - February 17, 2026

Market Overview

Gold prices have recently experienced a significant decline, dropping 5.6% as bearish sentiment grows among traders. The article discusses the implications of this downturn, particularly focusing on the potential target of $4,800 for gold prices, which could serve as a critical support level.

Recent Price Movements

Following a warning about the nature of gold's rally resembling a "dead cat bounce," the market has seen a shift in momentum favoring sellers. The recent selloff has been marked by two bearish engulfing candles, indicating a strong bearish trend.

Market Positioning

Short positions against gold futures are on the rise, particularly among large speculators and managed funds. Despite this increase, the overall short interest remains relatively low. The net-long positions have also fallen to a one-year low, suggesting a cautious outlook among traders.

Options Market Sentiment

Options traders are showing heightened concern, as indicated by the negative shift in risk reversals. The 10-delta risk reversal has reached its most negative level since December 2024, suggesting a stronger demand for puts compared to calls. This indicates that traders may be hedging against further declines in gold prices.

Technical Analysis

The technical outlook for gold futures shows two bearish engulfing candles, supporting the bearish sentiment. However, there are signs of potential bullish divergences on the RSI, indicating that some traders may see value at lower levels, particularly around the $4,800 mark. The article suggests that while bears may push for lower prices, bulls could attempt to buy dips, aiming for a rebound towards $5,000.

Conclusion

The outlook for gold remains uncertain, with bears targeting the $4,800 support level while bulls may see this as an opportunity to enter the market. The interplay between bearish sentiment and potential bullish support will be crucial in determining the future direction of gold prices.