As gold’s technical outlook continues to weaken, recent analyses indicate that selling pressure remains dominant in the market. Prices have now fallen below previous support levels, with recovery attempts losing momentum and a sense of caution prevailing among investors. Leading analysts Ian Cooper and Ole Hansen both highlighted the persistence of downward pressure, though they pointed to different underlying reasons for the current market sentiment.
Technical breakdown draws attention
According to Ian Cooper, gold’s recent trajectory has been defined by a sequence of lower highs, signaling a bearish structure. The horizontal support zone, which had supported price action on several occasions, was decisively broken to the downside, pulling prices deeper into lower regions on the chart. Notably, buyers have yet to show any strong reversal signals that might indicate a near-term recovery.
The daily chart remains negative, with price action persisting below former support lines. Cooper argued that the first real sign of weakness in this breakdown would only come if gold could reclaim the $4,000 level, signaling at least a technical reversal.
In the views of analysts, confirmation that the downward momentum in gold is easing would require a return above $4,000 first; otherwise, any rebound attempts are likely to remain limited.
Resistance has strengthened along the lower boundary of the downward trend line, which has served as a ceiling for rally attempts since the most recent peak. Analysts suggest that unless the price recoups these levels, prospects for a sustained recovery remain slim.
Heightened selling below $4,000
Cooper noted that investors are closely monitoring the next lower support region, with $3,900 emerging as a critical threshold. The fact that metals as a group failed to join in the late-session rebound in the previous trading day has been interpreted as a sign that gold’s sector is underperforming compared with other risk assets.
Ole Hansen, an experienced commodities and macro strategist with over a decade in the field, stated that the move below $4,000 accelerated the closure of long positions. According to Hansen, after the technical breakdown, investors scaling back positions further intensified the downtrend.
ETF outflows and a pronounced reduction in speculative positions have both contributed to mounting selling pressure. Data shows that as gold prices have retreated, ETF holdings have also shrunk. Meanwhile, the overall positioning in futures markets has turned more cautious, with many investors stepping back from risk.
Macro landscape offers limited relief
New economic data from the US has softened expectations of further interest rate hikes by the Federal Reserve. Easing inflation fears and weaker employment figures have both reduced the likelihood of continued aggressive tightening. Bond yields, which rose at the start of the week, have also pulled back in response.
Typically, such developments would be expected to reduce pressure on non-yielding assets like gold. However, a strong US dollar and ongoing ETF sell-offs have prevented gold from fully capitalizing on this macroeconomic relief.
Hansen commented that while the overall environment is less challenging than before, investor sentiment remains fragile. In the current outlook, $3,900 stands out as the major support level, while $4,000 is being watched as the primary resistance for any potential recovery attempt.
