Gold's technical picture darkens after drop below key support level

Gold has entered a troubling phase after falling to a low last seen more than one year ago at the close of last week. The situation could worsen for the precious metal, as technical indicators now point to a potential additional setback.

The recent decline has pushed gold back to near the $3,900 level, putting buyers in a tough spot. The key question is whether support will hold at this point or whether a more significant drop lies ahead.

Broad market selling and liquidity pressures contributed to the pain on Friday, when gold broke through the $4,000 level. The small recovery seen on Monday provides some comfort, but the weekly chart paints a far more concerning picture.

Gold is approaching a critical support at the 100-week moving average, currently at $3,882 and marked by a red line on charts. That represents a key threshold, as the metal has not seriously tested that technical level since 2023.

That is an unusually long gap for such an important indicator to remain unchallenged, and it reflects how strong the bull run has been over recent years.

For most of the past three years, gold has been in an almost uninterrupted upward trend. Buyers have been eager to add positions on pullbacks, encouraged by the long-term chart pattern. That confidence is now fading.

Lower highs in recent trading suggest sellers are gaining control. If the 100-week moving average breaks, a much larger correction may follow.

The next major support zone is around $3,500. If selling continues to intensify, the 200-week moving average near $3,020 could become a target.

A bounce from the moving average might still revive gold's battered outlook. But buyers would first need to regain $4,000 and then shift attention to $4,200.

For the moment, the main issue is not whether gold can recover. It is whether buyers can preserve the long-term uptrend they have relied on. Even the strongest bull markets require periodic proof of their resilience, and this is one of those moments.