Gold (XAU/USD) Falls Sharply Toward Key Support Levels

Gold has come under intense pressure recently as bearish momentum picks up steam. After an unsuccessful attempt to push past recent peaks, the precious metal broke down from a rising wedge formation on the 4-hour chart and is now testing important support areas. These technical levels might be where buyers decide to step back in and attempt a rebound.

Chart Analysis: Wedge Breakdown Triggers Deeper Pullback

The 4-hour chart shows a clear double-top formation around the $3,340–$3,360 resistance zone—a classic reversal signal that ended the prior uptrend. Following this rejection, gold broke below its short-term ascending wedge, confirming a bearish continuation pattern.

Gold is currently trading near $3,981, down over 2% in recent sessions. This drop lines up with finansalTRader's earlier warning about potential weakness toward key support levels. The price action shifted from a bullish channel into a consolidation triangle before collapsing through both trendlines—typical behavior during distribution phases after extended rallies.

Key Technical Levels to Watch

The chart identifies several crucial support zones where buyers might show up:

• First Support: $3,899–$3,896 (bright green zone) — The first potential bounce area after the breakdown
• Second Support: $3,820 — Lines up with a previous accumulation zone and could provide stronger support if selling continues
• Major Support: $3,798 (blue zone) — Represents deeper liquidity and may attract institutional buyers

If gold holds above these levels, a corrective bounce toward $4,080–$4,190 is possible. However, a close below $3,798 would likely signal more downside, potentially extending the correction toward lower Fibonacci levels.

The recent selloff coincides with a strengthening U.S. dollar and rising Treasury yields—both major headwinds for non-yielding assets like gold. Improving risk appetite in stock markets has also reduced demand for safe-haven plays.

That said, ongoing geopolitical tensions and inflation concerns still provide some underlying support, meaning a recovery from one of these support zones isn't out of the question.