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Gold Accelerates Its Decline After Breaking Key Support
Gold continues to fall rapidly. The XAU price dropped toward $4,410 after breaking a descending pattern on May 15, while the market is moving closer to the support zone near $4,376, which analysts consider critically important for the medium-term trend.
The technical picture is becoming increasingly bearish. Indicators show stronger selling pressure on both short-term and daily charts.
RSI Has Entered Oversold Territory
On the four-hour chart, gold fell below the middle line of the descending channel. The price is now moving near the lower boundary of the structure and testing the 0.618 Fibonacci retracement area around $4,376.
The Relative Strength Index, or RSI, dropped to 27. This is already deep oversold territory, but the market has not yet shown signs of a sustainable reversal.
At the same time, the Bollinger Band Width Percentile has moved out of the low-volatility zone and started expanding sharply. Such a scenario usually accompanies the continuation of a strong move rather than a quick rebound. As long as gold remains below $4,609, seller pressure persists.
The Daily Chart Confirms the Development of a Downtrend
On the higher timeframe, the situation looks similar, but with greater potential for further downside.
The daily RSI is near 36. This is noticeably higher than the extreme readings on the four-hour chart, meaning the market still has room for further decline without requiring an immediate technical recovery.
The expansion of BBWP after a long period of compression provides an additional signal. Historically, such exits from the “blue zone” of low volatility often trigger prolonged trending moves.
In effect, the current decline looks less like a local correction and more like a continuation of the structural breakdown that began in mid-May.
The $4,376 Level Becomes a Key Point for the Market
Traders’ attention is now focused on the $4,376 support. This is where the important 0.618 Fibonacci level is located.
If gold firmly consolidates below this area, the next major target could be the $4,044 region, where the 0.786 Fibonacci level is located.
Some analysts are looking even lower. Certain scenarios suggest a move toward $3,500 by the end of 2026 if market pressure persists.
Such forecasts look especially striking against the backdrop of recent expectations for gold to rise to $20,000, which were actively discussed in the derivatives market only a few months ago.
Why Gold Started Losing Ground
Gold’s weakness is happening against the backdrop of several factors at once. First, part of the capital has begun returning to the dollar and bonds after expectations of a tougher Fed policy increased. Second, some investors are taking profits after the strong rally at the beginning of the year, when XAU rose above $5,600.
Additional pressure comes from a decline in panic demand for safe-haven assets after tensions around the Middle East eased. Against this backdrop, the market is gradually moving out of aggressive hedging mode and reducing gold positions.
Market Volatility Has Risen Sharply
The current movement structure shows that the gold market is again entering a phase of high volatility. The sharp widening of the Bollinger Bands indicates that market participants have begun actively reallocating positions. For now, the initiative remains with sellers.
The longer the price stays below key resistance levels, the higher the probability that the decline will accelerate in the coming weeks.
What Comes Next?
The coming days could be decisive for gold. The $4,376 level now acts as the main line of defense for buyers.
If this support fails, the market could quickly move toward a test of $4,044 and lower. If weakness persists, long-term scenarios involving a move toward $3,500 will no longer look extreme.
For the bullish scenario to return, gold first needs to reclaim the $4,609 area. Until that happens, the technical picture remains in favor of further decline.
See also: "XRP Traders Warn of a Final Flush to $1.20 Before a Bullish Reversal"
