Gold closed below $4,000 for the first time on a decisive daily basis, as Fed-led global tightening and liquidation-style selling converged. ActionForex reads Monday's bounce as relief within an established downtrend, with resistance at 4,083.41.
Gold plunged 3.61% on Friday to close at 3,875.19, its first decisive daily close below the $4,000 level. Silver lost 5.82% and finished below $50.
By Monday, gold had recovered toward 3,907, but it remains approximately 30% below its January peak of 5,598.75.
Global tightening weighs on gold's appeal
According to ActionForex, expectations of higher policy rates can create a persistent disadvantage for a non-yielding asset such as gold. The Fed held the federal funds target at 3.75–4.00% in October, but two officials dissented in favour of an immediate increase.
Markets now assign around 72.6% probability to a December hike, according to ActionForex. Meanwhile, Brent crude is trading around $110, which the source says threatens to prolong inflation pressures.
Friday's drop came without a surging dollar
Friday's selloff looked unusual because gold fell sharply without a surging Dollar or rising Treasury yields. The Dollar Index increased only 0.11%, while Nasdaq lost 2.86% and the S&P 500 declined 1.82%.
ActionForex notes that Reuters reported margin call selling tied to the technology-market selloff, including sales of gold. The source adds that it lacks positioning data, so the exact contribution of forced liquidation remains unconfirmed.
Oversold readings and the levels to watch
Gold's daily RSI has fallen toward 33, and such oversold conditions can produce sharp countertrend rebounds. Even so, ActionForex says the outlook stays bearish as long as 4,083.41 resistance holds.
The next downside objective is 3,748.81. A sustained break below the falling channel floor would expose 3,606.83 and eventually 3,136.74.
Source: ActionForex
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