Gold Falls Below $4,000 — Is a Deeper Correction Coming?

The gold market started the week with a sharp decline, as prices dropped more than 3%, falling below the $4,000 psychological level for the first time. While the long-term trend remains bullish, analysts are warning that prices could slide further in the short term.

According to market analysts, the recent drop comes after the U.S. and China agreed on a framework for trade negotiations, easing geopolitical tensions and boosting risk appetite among investors. As a result, capital has flowed away from safe-haven assets like gold and into riskier markets. Meanwhile, the S&P 500 has hit another record high, closing above 6,858 points for the first time in history.

Fawad Razaqzada, Market Analyst at City Index and FOREX.com, commented:
“The decline in gold prices has coincided with renewed optimism surrounding trade talks between the U.S. and China. As risk sentiment improved, equities rallied to new highs, leaving safe-haven assets like gold under pressure.”

He added: “It’s not surprising to see gold dip below $4,000, especially after last week’s volatility. However, this level remains a critical psychological zone. If prices fail to hold above it in the coming days, further liquidation could occur, particularly from short-term speculative positions.”

David Morrison, Senior Market Analyst at Trade Nation, believes downside momentum has strengthened:
“The daily MACD has dropped sharply, signaling that bearish momentum has increased. For gold to regain bullish strength, it needs to move back above $4,100 per ounce.”

Ole Hansen, Head of Commodity Strategy at Saxo Bank, suggested that gold may be entering a new consolidation phase. He identified $3,846 as a key support level, representing an important retracement from August’s breakout rally.
“The recent price action suggests this year’s high may already be in place,” Hansen noted. “With equities strengthening and traders growing more cautious, a quick recovery seems unlikely.”

Meanwhile, Chantelle Schieven, Head of Research at Capitalight, said she is watching the $3,750 level — gold’s 50-day moving average — as potential support. However, she emphasized that this pullback appears corrective rather than structural.

“This correction looks like a healthy consolidation within a broader structural bull market,” she said. “Given the ongoing macroeconomic and policy risks, our long-term outlook for gold remains constructive.”