If gold is the litmus test for safe-haven assets, its recent volatility has injected unease into market sentiment. After breaching the critical psychological threshold of $4,000, the metal's decline has continued, hitting its lowest level since October 10 with a single-day drop of $125.
Technical Analysis: Correction May Deepen
From a technical perspective, the current downturn has approached the 38.2% Fibonacci retracement level of the rally since August, near $3,970. This level could serve as short-term support, but a breach may accelerate losses toward the 50% retracement at $3,844—a potentially stronger support zone. Notably, gold's failure to accelerate downward after breaking through key round-number resistance suggests subdued market participation.
Fundamental Drivers: Trade Optimism Weighs on Demand
The primary catalyst for gold's retreat stems from improving trade relations between the U.S., China, and other partners. Easing geopolitical tensions have reduced appetite for defensive assets, while a strengthening U.S. dollar has compounded downward pressure.
Outlook: Monitoring Support Levels and Sentiment Shifts
Investors should watch the $3,970 and $3,844 support levels closely. A sustained break below $3,970 could signal further declines. Market sentiment remains pivotal—continued trade progress may extend gold's weakness, whereas renewed geopolitical risks or economic concerns could revive safe-haven bids.
Risk Advisory: Gold investments carry inherent volatility. Market conditions should be monitored continuously, with decisions aligned to individual risk tolerance. This analysis does not constitute investment advice.