Gold continues to decline rapidly. The XAU price fell to $4,410 after breaking the descending pattern on May 15, and the market is approaching the support zone around $4,376, which analysts consider critically important for the medium-term trend.
The technical picture is becoming increasingly bearish. Indicators show increased selling on both short-term and daily charts.
RSI Enters Oversold Territory
On the four-hour chart, gold has dropped below the midline of the descending channel. The price is now moving near the lower boundary of the structure and is testing the 0.618 Fibonacci retracement area around $4,376.
The relative strength index (RSI) has fallen to 27. This is already a deep oversold zone, but the market is not yet showing signs of a sustainable reversal.
At the same time, the Bollinger Band Width Percentile has exited the low volatility zone and started to expand sharply. Usually, this scenario accompanies the continuation of a strong move, not a quick rebound. As long as gold remains below $4,609, selling pressure persists.
Daily Chart Confirms Downtrend Development
On the higher time frame, the situation looks similar, but with greater potential for further decline.
The daily RSI is around 36. This is noticeably above the extreme values on the four-hour chart, which means the market still has room for further decline without the need for immediate technical recovery.
An additional signal is given by the expansion of the BBWP after a long period of contraction. Historically, such exits from the ‘blue zone’ of low volatility often trigger prolonged trending moves.
In fact, the current decline looks less like a local correction and more like the continuation of a breakout that began back in mid-May.
The $4,376 Level Becomes a Key Point for the Market
Traders’ attention is now focused around the $4,376 support. This is where the important 0.618 Fibonacci level passes.
If gold firmly consolidates below this area, the next major target could be the $4,044 region, where the 0.786 level on the Fibonacci grid 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 just a few months ago.
Why Gold Has Started to Lose Ground
Gold’s weakening is happening amid several factors at once. First, some capital has started to return to the dollar and bonds after rising expectations of a more hawkish Fed policy. Second, some investors are taking profits after the strong rally at the start of the year, when XAU rose above $5,600.
Additional pressure is created by the decline in panic demand for safe-haven assets after tensions around the Middle East eased. Against this backdrop, the market is gradually exiting aggressive hedging mode and reducing gold positions.
Market Volatility Surges Sharply
The current movement structure shows that the gold market is once again entering a phase of high volatility. The sharp expansion of Bollinger Band ranges indicates that market participants have begun actively reallocating positions. For now, the initiative remains with sellers.
The longer the price remains below key resistance levels, the higher the likelihood of an accelerated decline in the coming weeks.
What's Next?
The coming days could be decisive for gold. The $4,376 level now serves as the main line of defense for buyers.
If this support does not hold, the market could quickly move to test $4,044 and below. If weakness persists, long-term scenarios with a move toward $3,500 will no longer look extreme.
For a bullish scenario to return, gold must first reclaim the $4,609 area. Until that happens, the technical picture remains in favor of further decline.
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