gold prices have regained some footing after recent sharp declines, with the metal bouncing off a crucial support level near $4,000. Early Wednesday, bullion attempted a recovery above $4,100 amid a pause in the downward momentum, reversing the steep losses experienced earlier in the week. This rebound reflects buyers’ cautious interest as market participants await new developments on the US-China trade negotiations, a factor that continues to influence precious metals markets.
Following a Tuesday plunge of over 5%, gold experienced a further decline in the Asian trading session, falling by approximately $125. The decline was driven largely by profit-taking following a record-setting rally that traders considered overextended. Despite this, bargain hunters entered the market quickly, supporting gold ’s price recovery near the $4,100 mark. The intense volatility underscored traders’ ambivalence amidst easing trade tensions between the United States and China, with optimism stemming from anticipated discussions between US officials and Chinese counterparts.
Market sentiment also shifted in response to a strengthening US dollar, which gained momentum courtesy of a rally in the USD/JPY currency pair. The Japanese yen faced headwinds following the election of Sanae Takaichi as Japan’s Prime Minister, signaling potential shifts towards more expansionary economic policies, subsequently weighing on the yen. This scenario buoyed the US dollar, further pressuring gold ’s competitiveness in global markets.
Technical analysis indicates that gold remains supported by critical levels around $4,000, where the 21-day simple moving average and a key Fibonacci retracement converge. To sustain the current rebound toward record highs near $4,382, buying momentum needs to reestablish itself above $4,129, the 23.6% Fibonacci level. Meanwhile, momentum indicators like the RSI have stabilized near 59, suggesting that the overall bullish trend remains intact short-term. On the downside, a break below the $4,000 level could open the door to deeper corrections toward the 50% Fibonacci retracement at approximately $3,847, with the 61.8% Fibonacci level near $3,722 acting as a further support zone.
