Gold price extends the decline, breaks below $4,600

Gold plunged more than 4% on Thursday, sliding below $4,600 per ounce and deepening losses following a sharp decline in the previous session. The metal extended its sell-off during the early European session, hitting a fresh multi-week low of $4,520. This sell-off was mainly caused by significant profit-taking, and investors adjusted their expectations regarding monetary policy changes. It seems that long positions in gold have been liquidated, while short positions have been established during the past few trading sessions.

Hawkish Fed and strong dollar drive gold Lower

The strength of the US dollar and the Federal Reserve’s hawkish stance were the main negative factors pressuring gold prices. At its March meeting, the Fed kept rates steady at 3.50%-3.75%, but Chairman Powell indicated that rising oil prices linked to tensions in Iran could elevate inflation in the short term. This is significant because persistent inflation concerns reduce the likelihood of rate cuts, thereby strengthening the dollar.

XAUUSD: short-term technical outlook

Gold prices weakened after breaking below the psychological support level of $5,000 on the daily timeframe, signaling a resumption of the downward trend. The 14-period Relative Strength Index (RSI) moved into the bearish range of 20.00-40.00, indicating established bearish momentum.

Technically, the price fell below $4,600, reaching a low of $4,520 before beginning a modest correction. Key supply and demand levels are highlighted in the accompanying chart.

Looking ahead, the next major support zone for bulls is near $4,500/4,480. A relief rebound is expected as long as the price holds above this area, potentially targeting $4,600 and, if momentum strengthens, $4,680. However, a break below $4,500—and especially below $4,480—could trigger an extended sell-off.

In Summary

Gold’s near-term outlook remains sensitive to geopolitical developments and interest rate expectations. The metal is expected to remain volatile in the near term. This volatility presents both challenges and opportunities; if managed wisely, it can become your greatest asset. Investors should closely monitor geopolitical events and Federal Reserve communications to navigate the evolving market conditions effectively.

 

Disclaimer! This material is not intended as investment advice. Past performance data does not guarantee future profits. Investing in foreign currencies may affect your returns due to their fluctuations. Any securities transaction may result in both profits and losses. The assumptions and expectations set forth in the material are only estimates that may not be accurate and may change according to current economic conditions. These statements do not guarantee future performance.