Gold extended its steep June decline on Thursday, breaking decisively below the psychologically crucial $4,000 level as ongoing Federal Reserve hawkishness and a surging U.S. dollar continued to punish the precious metal. The XAU price tumbled to a seven-month low, with technical analysts now eyeing a potential further slide toward the $3,800 support zone.
The recent rout was triggered by a combination of robust U.S. jobs data and stubbornly high inflation, which have forced markets to reprice interest rate expectations. Under Fed Chair Kevin Warsh, policymakers have maintained a hard line on inflation, extinguishing hopes for near-term rate cuts and instead raising the probability of additional hikes. This shift has pushed Treasury yields higher, increasing the opportunity cost of holding non-yielding gold, while the dollar index has climbed over 2% this month to its strongest level in more than a year, making gold more expensive for foreign buyers.
From a technical perspective, gold’s breakdown below $4,000 followed a prior breach of the $4,100 multi-month low from March, accelerating the short-term impulse wave 3 of the intermediate wave (C) that began in mid-April. According to an analysis from FinanceFeeds, the clear daily downtrend and prevailing risk-off sentiment suggest gold is likely to continue downward to the next support target at $3,800, completing the active impulse wave.
However, some analysts see potential for a short-term bounce. Allie (@XAUUSD__AILIE) identifies the $3,970–$3,980 zone as critical support, with $4,080–$4,100 serving as the next major resistance area. She advises traders to watch for sell opportunities on an initial approach to the $4,080–$4,100 zone and buy setups near the $3,970–$3,980 level. Mary Taylor (@Mary_CFA) similarly emphasizes $4,000 as the dividing line between a recovery attempt and further decline. Immediate resistance sits at $4,040, followed by $4,065, while a breakdown beneath $4,000 could expose gold to her downside target of $3,920.
Both analysts note active buying interest in the demand zone around $3,950–$4,000, with signs that selling pressure may be easing. A breakout above the descending trendline controlling price action since the mid-June peak would strengthen the case for a move toward $4,080–$4,100. Nonetheless, the macro backdrop remains firmly bearish: the latest Core PCE inflation data is expected to rise to 3.4%, keeping pressure on the Fed to stay restrictive, while easing geopolitical tensions—including an extended U.S.-Iran ceasefire—have reduced safe-haven demand. For now, gold appears trapped in a range between $4,000 and $4,100, with the next inflation report likely to determine the direction of the next major leg.
