Gold Price Outlook: Bears Target 4,000 Before a Potential Rebound

Gold remains under pressure as bearish momentum builds and futures traders trim long exposure. With prices now within striking distance of 4,000, bears may remain in control near term, although the major psychological level could prove difficult to break and provide the foundation for a rebound.

View related analysis:

Gold Bears Eye 4,000 as Futures Sentiment Weakens

Gold Futures (GC) Positioning | COT Report

While traders remain net-long on the CME gold futures market, their confidence is waning. Both large speculators and managed funds have trimmed their longs over the past five weeks, though not by an aggressive amount. However, managed funds increased their gross shorts last week, while large specs have done so for the past two. Again, only by marginal amounts, but it shows a shift in sentiment towards the gold market.

Options traders have also increased their bearish view slightly, with risk reversals moving increasingly below zero to show demand for puts outnumbering demand for calls. These are not grisly levels of bearishness, and that may be because 4,000 is a big level to break. And one I suspect will hold initially and prompt a countertrend bounce over the near term.

Source: CFTC (COT), COMEX, LSEG

Gold Futures (GC) Technical Analysis

A closer look at the weekly chart shows bearish momentum increased last week, with gold now trading less than a typical week’s range from 4,000. That puts the level within striking distance, although such a big round number could prove difficult to break cleanly and potentially trigger a volatile shakeout before a countertrend bounce.

The US dollar probably needs to stop accelerating before we can assume a meaningful low for gold. While DXY momentum still points higher, it formed a shooting star below 102 to hint at early signs of fatigue. So perhaps gold’s latest leg lower is nearing its end.

The daily chart remains bearish overall after Thursday’s outside day, although prices are holding above last week’s low. The 4,200 area could be reclaimed over the near term, but bears may look to fade rallies towards the monthly pivot near 4,300 and the 200-day EMA at 4,331.8. On the downside, note the high-volume node (HVN) at 4,082 and the 4,100 handle as potential support ahead of 4,000.

Ultimately, my bias is for bears to fade rallies towards 4,000, where gold seems more likely to find support and stage a decent rebound. That would also allow time for the US dollar to form a near-term top and provide gold with some breathing room.

Source: COMEX, TradingView

StoneX Financial Ltd (trading as "FOREX.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, FOREX.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date.

This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it. No opinion given in this material constitutes a recommendation by FOREX.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although FOREX.com is not specifically prevented from dealing before providing this material, FOREX.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Financial Ltd. StoneX Financial Ltd is a company incorporated in England and Wales with UK Companies House number 05616586 and with its registered office at 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is authorised and regulated by the Financial Conduct Authority in the UK, with FCA Register Number: 446717.

FOREX.com is a trademark of StoneX Financial Ltd . This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy. FOREX.com products and services are not intended for Belgium residents.