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 author notes that two of the last three trading sessions have shown bearish engulfing candles, indicating a strong selling pressure.
Futures Positioning
Analysis of the Commitment of Traders (COT) report reveals an increase in short positions against gold futures, particularly among large speculators and managed funds. Despite this, the overall short interest remains relatively low, and net-long positions have fallen to a one-year low, suggesting that while bearish sentiment is rising, it may not yet indicate a major pullback.
Options Market Sentiment
The options market is showing signs of extreme sentiment, with the 10-delta risk reversal indicating a strong demand for puts over calls. This shift suggests that traders are either hedging against potential downside moves or that the market is experiencing a sentiment extreme, which could lead to a rebound in prices.
Technical Analysis
Technical indicators reveal that gold futures have formed bearish patterns, yet there are signs of bullish divergences on the RSI, indicating potential buying interest at lower levels. The author anticipates that if prices approach the $4,800 support level, bulls may see this as an opportunity to buy, aiming for a rebound towards $5,000 and possibly higher.
Conclusion
The outlook for gold remains uncertain, with bears targeting the $4,800 level while bulls may view this as a buying opportunity. The market is likely to remain choppy, oscillating between these key levels as traders react to ongoing sentiment shifts and technical signals.