Gold starts the week down 3%! Could gold prices fall further in the battle for $4,000?
2025-10-28 12:04:37
On Tuesday (October 28), spot gold fluctuated around $3,990 per ounce, essentially holding onto the previous day's losses. Following last week's sharp sell-off, gold prices faced further technical selling pressure, briefly falling below $4,000 per ounce. While the long-term bullish market trend remains intact, gold prices could decline further in the short term.
According to some analysts, gold is facing renewed selling pressure after the United States agreed to a framework deal for trade negotiations, easing some geopolitical uncertainties.
Gold prices spent much of Monday and Tuesday trading below $4,000, but eventually recovered some of those losses on Monday. Spot gold fell more than 3% on Monday. Monday's decline followed a 3% drop last week after the metal failed to recover from its worst single-day drop in years.
City Index market analyst Fawad Razakzada noted that the continued sell-off in gold was due to the S&P 500 hitting another record high, trading above 6,858 points.
“Gold’s decline comes amid renewed optimism about trade talks between the two largest economies. The S&P 500 hit a record high as risk appetite improved, putting safe-haven assets like gold on the defensive,” he said. “While these developments have boosted market sentiment, analysts remain skeptical that fundamental issues like national security and technological competition can be fully resolved. Nevertheless, traders have jumped on the bandwagon of improved risk appetite, weakening near-term demand for gold as a hedge.”
Razakzada explained that the break below $4,000 was not surprising , as the breakout seemed inevitable given last week’s price action, but noted that the price level will remain a key psychological barrier .
He added: “Bears are looking for a decisive breakout – meaning that gold prices remain below this resistance level for several days rather than just two or three. If this scenario materializes, it could trigger further liquidation, particularly from speculative long positions. Conversely, any resilience in gold prices around $4,000 could attract bargain hunters back into the market – especially those who missed out on the earlier rally.”
(Spot gold daily chart, source: Yihuitong)
From a technical perspective, analysts pointed out that the daily MACD indicator has pulled back sharply. Although it is no longer in a severely overbought state, it currently shows that the downward momentum has increased. Gold needs to rise above $4,100 per ounce to form a new bullish momentum .
Saxo Bank's head of commodity strategy, Hansen, said investors should be prepared because gold may be entering a new round of consolidation. After the gold price broke through the $3,000 per ounce mark, the market has been trading sideways for four months.
Hansen said he would be watching the key support level of $3,846 an ounce, which represents an important correction level for gold prices since its breakout rally in August.
Recent price action suggests the year's high may have been reached, but recoveries from deep corrections may take longer amid growing trade caution and a renewed rally in equities.
“The reasons for holding gold haven’t suddenly disappeared – the question is whether they are strong enough to justify a year-to-date rally of over 50%,” he said. “In my view, the next leg up is more likely to be a 2026 story, given that the latest consolidation phase, which began in April, has lasted four months.”
In her latest report, Chantelle Siwen, head of research at Capitalight, noted that she is watching for a test of support near $3,750 per ounce, which currently corresponds to gold's 50-day moving average (3,783.49). However, she added that from a broader perspective, gold's downside remains limited, and this decline is a market correction rather than a structural sell-off .
“This pullback appears to mark a healthy consolidation within the overall structural bull market, and given ongoing macroeconomic and policy risks, we remain constructive on gold’s long-term bullish outlook,” she said.
At 12:04 Beijing time, spot gold was trading at $3,990.48 per ounce.
According to some analysts, gold is facing renewed selling pressure after the United States agreed to a framework deal for trade negotiations, easing some geopolitical uncertainties.
Technical breakdown triggers market wait-and-see
Gold prices spent much of Monday and Tuesday trading below $4,000, but eventually recovered some of those losses on Monday. Spot gold fell more than 3% on Monday. Monday's decline followed a 3% drop last week after the metal failed to recover from its worst single-day drop in years.
City Index market analyst Fawad Razakzada noted that the continued sell-off in gold was due to the S&P 500 hitting another record high, trading above 6,858 points.
“Gold’s decline comes amid renewed optimism about trade talks between the two largest economies. The S&P 500 hit a record high as risk appetite improved, putting safe-haven assets like gold on the defensive,” he said. “While these developments have boosted market sentiment, analysts remain skeptical that fundamental issues like national security and technological competition can be fully resolved. Nevertheless, traders have jumped on the bandwagon of improved risk appetite, weakening near-term demand for gold as a hedge.”
Razakzada explained that the break below $4,000 was not surprising , as the breakout seemed inevitable given last week’s price action, but noted that the price level will remain a key psychological barrier .
He added: “Bears are looking for a decisive breakout – meaning that gold prices remain below this resistance level for several days rather than just two or three. If this scenario materializes, it could trigger further liquidation, particularly from speculative long positions. Conversely, any resilience in gold prices around $4,000 could attract bargain hunters back into the market – especially those who missed out on the earlier rally.”
(Spot gold daily chart, source: Yihuitong)
Long-term support still exists but needs time to consolidate
From a technical perspective, analysts pointed out that the daily MACD indicator has pulled back sharply. Although it is no longer in a severely overbought state, it currently shows that the downward momentum has increased. Gold needs to rise above $4,100 per ounce to form a new bullish momentum .
Saxo Bank's head of commodity strategy, Hansen, said investors should be prepared because gold may be entering a new round of consolidation. After the gold price broke through the $3,000 per ounce mark, the market has been trading sideways for four months.
Hansen said he would be watching the key support level of $3,846 an ounce, which represents an important correction level for gold prices since its breakout rally in August.
Recent price action suggests the year's high may have been reached, but recoveries from deep corrections may take longer amid growing trade caution and a renewed rally in equities.
“The reasons for holding gold haven’t suddenly disappeared – the question is whether they are strong enough to justify a year-to-date rally of over 50%,” he said. “In my view, the next leg up is more likely to be a 2026 story, given that the latest consolidation phase, which began in April, has lasted four months.”
In her latest report, Chantelle Siwen, head of research at Capitalight, noted that she is watching for a test of support near $3,750 per ounce, which currently corresponds to gold's 50-day moving average (3,783.49). However, she added that from a broader perspective, gold's downside remains limited, and this decline is a market correction rather than a structural sell-off .
“This pullback appears to mark a healthy consolidation within the overall structural bull market, and given ongoing macroeconomic and policy risks, we remain constructive on gold’s long-term bullish outlook,” she said.
At 12:04 Beijing time, spot gold was trading at $3,990.48 per ounce.
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