Gold dropped below $4,000 on Thursday, 28% off its January record of $5,598, and printed its first bearish Gaussian channel bar on the weekly chart since October 2023. The move signals a confirmed bear market for the precious metal, driven by surging oil prices and rising bets on a Federal Reserve rate hike — not the usual war-driven rally many expected.
Bear market signal on the weekly chart
The weekly Gaussian channel bar turned red for the first time in nearly three years, a technical pattern that historically tracks long-term trend shifts. On the daily chart, the 50-day moving average crossed below the 200-day line on June 26, forming a death cross. Gold also lost its long-term 0.382 Fibonacci retracement at $4,333; the former support zone between $4,300 and $4,400 now acts as resistance. The 0.5 retracement near $3,943 is currently being tested, with the 0.618 golden pocket at $3,552 as the next major support.
Why gold is falling despite war headlines
US airstrikes hit Iranian military sites for a fourth consecutive day, and the Strait of Hormuz remains closed to merchant traffic. Typically, such geopolitical turmoil would lift gold. But oil gained over 9% in five days, stoking inflation fears and pushing the market to price roughly 76% odds of a September rate hike, up from 57% a week ago, according to CME FedWatch data. The June FOMC minutes showed policymakers split nine to eight in favor of at least one 2026 hike, and the core PCE inflation forecast rose to 3.3%. Higher rates are a direct headwind for non-yielding gold.
Gold ETF outflows dwarf Bitcoin ETF redemptions
The largest US gold-backed ETF, GLD, has recorded $14.4 billion in outflows since March 1. That's 50% more than the outflows from spot Bitcoin ETFs over the same period, highlighting the stark contrast in investor appetite for the two assets. Bitcoin ETFs have seen outflows, but gold's exodus is far larger in absolute terms.
Key levels to watch
The price is currently testing the 0.5 Fibonacci retracement at $3,943. The daily RSI has formed a bullish divergence — higher lows on the oscillator while price made lower lows through late June and July. That suggests a bounce could be in the works. A rally would likely target the $4,300-$4,400 resistance zone, about 7% above the current price. A rejection there would expose the golden pocket at $3,552, an 11.4% drop from current levels. The next move hinges on whether the Fed's rate path shifts or oil prices finally cool.
