Gold breaks below 200-day moving average, $4,000 support in focus

Gold fell to $4,318.20 an ounce, breaking below its 200-day moving average for the first time since October 2023.

"The technical picture has deteriorated noticeably following last week's selloff," Fawad Razaqzada, market analyst at FOREX.com, said. "The break beneath the 200-day moving average accelerated downside momentum."

Gold has dropped more than 20% from its January record high of $5,600 an ounce, entering bear market territory. The decline accelerated after a stronger-than-expected US jobs report on Friday, which prompted markets to price in a 25-basis-point rate hike by December, lifting the federal funds rate to a range of 3.75% to 4.00%, according to the CME FedWatch Tool. The US Dollar Index climbed back above 100, adding pressure on dollar-denominated commodities.

The next major support is a longer-term ascending trend line near $4,230 an ounce, Razaqzada said. Below that, support levels become sparse until the March lows around $4,100, creating scope for a decline toward the psychologically important $4,000 level. Wednesday's Consumer Price Index report, with core inflation expected at 2.9% year-over-year, is the next event that could determine gold's near-term direction.

Simon-Peter Massabni, head of business development at XS.com, said the resilient labor market and rising inflation pressures support higher interest rates and a stronger US dollar, creating a near-term headwind for gold. However, he maintained a bullish medium-term outlook, citing continued central bank gold purchases and elevated global debt levels as structural supports.

Jeff Sarti, CEO of Morton Wealth, said the long-term thesis for gold remains intact. "Long-term trends of fiscal and monetary recklessness, coupled with continued inflationary pressures, remain in force as strongly as ever," he said, adding that lower prices could represent a buying opportunity for underweight investors.

Silver, often viewed as a higher-beta proxy for gold, was testing support at its own 200-day moving average near $67 an ounce.

This article is for informational purposes only and does not constitute investment advice.