Gold heads toward a fourth weekly decline
The gold market is closing the week under pressure, with prices struggling to hold the critical $4,000 an ounce area.
The metal is on course for its fourth consecutive weekly loss, which would mark its longest losing streak since August 2023.
The recent decline reflects a shift in the macroeconomic backdrop. Gold has been hit by a stronger US dollar, rising inflation concerns and a Federal Reserve that has moved away from a loosening bias toward a more hawkish policy stance.
Iran war keeps inflation fears alive
The war in Iran has heavily disrupted global energy markets in recent months. Higher oil prices have intensified inflation concerns and are now feeding into broader expectations for monetary policy.
Those concerns gained force after the Federal Reserve signaled that a rate hike could still come before the end of the year.
At the same time, analysts say the US economy has remained relatively resilient despite the energy shock. That has revived the “American Exceptionalism” trade, strengthening demand for the dollar and adding another headwind for gold.
Vecchio turns bearish after Fed meeting
Christopher Vecchio, head of futures and forex strategy at Tastylive, said he had maintained a neutral view on gold for the past four months. That changed after the Federal Reserve’s latest monetary policy meeting.
Although the central bank left interest rates unchanged, updated projections showed support among officials for a rate increase by year end. Federal Reserve Chair Kevin Warsh also made clear that price stability remains his main priority.
Vecchio said gold traders should focus closely on short term rates, especially the two year Treasury yield. In his view, if the Fed keeps moving toward rate hikes, gold could fall into the $3,000 range.
Two year yields remain a key pressure point
Two year Treasury yields have eased from their recent peaks, but they remain near their highest level in a year.
That matters because gold does not generate income. When short term yields stay elevated, the opportunity cost of holding bullion increases.
A stronger dollar and higher short term rates therefore create a difficult combination for gold, especially when investors believe the Fed may keep policy tighter for longer.
Technical signals warn of more weakness
Alex Kuptsikevich, chief market analyst at FxPro, said gold remains above a major support level but he is not convinced the $4,000 area will survive.
He pointed to the emergence of a bearish technical pattern known as a death cross, which occurs when the 50 day moving average falls below the 200 day moving average.
Kuptsikevich said sellers repeatedly tried to push prices below the psychologically important $4,000 level during the second half of the week, although selling pressure eased on Friday afternoon.
He also noted that attempts to move back above the 50 week moving average have failed. Still, the current zone also served as support late last year, which suggests the fight around this level could remain intense.
Momentum remains tilted to the downside
David Morrison, senior market analyst at Trade Nation, also warned that gold’s near term momentum remains bearish.
He said the daily MACD indicator is oversold, but not nearly as stretched as it was in March. That leaves room for another wave of selling if traders attempt to force long positions out of the market.
For now, the technical picture suggests that gold needs a stronger rebound to convince investors that a bottom has been established.
Next week may decide the short term trend
Fawad Razaqzada, market analyst at FOREX.com, said next week’s price action will be important in determining whether gold has found support.
He noted that prices briefly moved below $4,000, but sellers did not find enough supply to drive the market much lower.
However, if another bounce fades like previous recovery attempts, Razaqzada said a breakdown could follow. In that scenario, gold could move back toward $3,500 in the coming weeks.
On the upside, he identified $4,098, the March low, as the first resistance level to watch. The next major level would be $4,200.
Long term buyers still see value
Despite the near term downside risks, some analysts believe current prices remain attractive for long term investors.
They argue that it is difficult to see gold staying below $4,000 for an extended period, especially given the metal’s role as a reserve asset and portfolio hedge.
Central bank demand has slowed from earlier levels, but official sector buying continues to provide an important source of support. Analysts expect those purchases to help create a floor under the market.
Fed rate hike expectations may be too aggressive
Some analysts question whether the Federal Reserve will actually raise rates this year, even if inflation remains elevated.
Fahad Tariq, senior vice president of equity research at Jefferies, said investors appear to be pricing in a single dominant scenario: another Fed rate hike in 2026.
He said the Fed could choose to look through the oil price shock, especially with WTI crude back below $70 a barrel. Tariq also said it is difficult to see rates moving higher this year because of political and fiscal implications.
Jobs data could shape the next Fed move
Next week’s employment report may play a major role in shaping expectations for Federal Reserve policy.
Lukman Otunuga, senior market analyst at FXTM, said a strong US jobs report on July 2 could support the Fed’s hawkish message, especially if World Cup related hiring lifts the headline figure above expectations.
If such a report increases the perceived odds of a July rate hike, Otunuga said gold could face renewed pressure below $4,000.
From a technical perspective, he said a hold above $4,000 could open the way back toward $4,100 and $4,250. A break below that key support could allow sellers to target $3,900 and the 100 week simple moving average near $3,740.
Holiday week puts focus on early data
The US government’s nonfarm payrolls report will be released Thursday because financial markets will be closed Friday for Independence Day. This year marks the 250th anniversary of American independence.
Several other economic releases could also influence gold, Treasury yields and the dollar during the shortened trading week.
Tuesday will bring US Consumer Confidence and JOLTS job openings. On Wednesday, Canadian markets will be closed for Canada Day, while the US calendar includes ADP employment, Fed Chair Kevin Warsh speaking at the ECB Forum and the ISM Manufacturing PMI.
Thursday will be dominated by the US nonfarm payrolls report. US markets will then close Friday for Independence Day.
