Key Takeaways

-Gold broke below $4,000 for the first time since November 2025 as bearish momentum intensified.

-Rising expectations for further Fed rate hikes continue to pressure non-yielding assets like gold.

-A stronger US dollar is reinforcing downside pressure and weakening demand for bullion.

-Traders are watching $4,018 resistance and $3,963 support for short-term direction.

-US PCE inflation data is the key catalyst that could shape the next major move.

XAUUSD extended its decline on Thursday as gold remained under sustained pressure from a stronger US dollar and growing expectations of additional Federal Reserve rate hikes.

Spot gold slipped to around $3,980, while US futures also eased, confirming continued selling momentum after the breakdown below the $4,000 psychological level. The move marks a significant shift in sentiment, with gold now down sharply from its earlier highs as macro conditions turn increasingly restrictive.

The broader market narrative has shifted toward a higher-for-longer interest rate outlook, with traders increasingly pricing in the possibility of multiple rate hikes this year. This has reduced the appeal of gold, which does not offer yield.

What Traders Are Watching?

Traders are watching XAUUSD because the break below $4,000 signals a key shift in both sentiment and technical structure. Gold is highly sensitive to interest rate expectations, and the current environment continues to favour the US dollar. Higher yields increase the opportunity cost of holding gold, while dollar strength adds additional pressure by making bullion more expensive for non-US buyers.

At the same time, inflation remains a key driver. Markets are closely monitoring upcoming US PCE data, which could either reinforce expectations of tighter policy or provide relief if inflation shows signs of easing.

Technical Analysis & Key Levels

XAUUSD is trading below its short-term moving averages, confirming continued bearish pressure after the breakdown of the $4,000 level. Resistance is seen at $4,018, followed by $4,023 and $4,087. A recovery above $4,000 would be the first signal of stabilisation, but stronger momentum would require a break above $4,018.

Support is located at $3,963, followed by $3,959 and $3,946. A move below $3,963 would increase downside pressure and expose deeper bearish continuation. Overall, price action suggests consolidation after a sharp selloff, but the broader structure remains weak while gold trades below $4,000.

Trading Outlook

Short-term sentiment remains fragile as gold trades near key breakdown levels and reacts strongly to macro expectations. The next major catalyst is US PCE inflation data. A stronger reading could reinforce Fed tightening expectations and maintain pressure on gold, while a softer outcome may help stabilise price action and trigger a relief rebound. Traders should expect continued volatility as markets adjust positioning ahead of key macro data releases.

For a deeper breakdown of how Fed policy expectations, US dollar strength, and inflation data are shaping gold’s bearish momentum, read the full analysis.