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Gold prices experienced a late-week rebound amid reduced expectations of two additional Federal Reserve rate hikes in 2024, but the precious metal remains in a four-week downward trend. Technical analysis suggests bears are aggressively targeting the psychologically significant $4,000 level, which has historically acted as a critical support zone. While the short-term bounce offers temporary relief, analysts argue this correction does not signal a reversal in the broader bearish trend driven by higher interest rates and a stronger U.S. dollar.
For traders, the $4,000 level represents a key inflection point. A sustained break below this threshold could accelerate the decline toward $3,800, while a rebound above $4,200 might indicate renewed buying interest. The Fed's upcoming policy decisions and inflation data will be critical in determining gold's trajectory, as rate hikes directly impact the metal's appeal as an inflation hedge.
Market participants should closely monitor the Fed's September meeting and nonfarm payrolls data for clues about rate hike timing. If the U.S. dollar remains strong against the euro and yen, gold could face further downward pressure. Technical indicators like the RSI and MACD suggest oversold conditions, but momentum remains bearish, warranting caution before entering long positions.
