Gold’s bearish breakdown below its 200-day moving average signals growing downside risks as markets price in a renewed Fed tightening cycle and higher US Treasury yields.
Key takeaways
- Gold closed below its 200-day moving average for the first time since October 2023, reinforcing a potential bearish medium-term outlook.
- Rising expectations of Fed rate hikes and higher Treasury yields are reducing gold’s appeal as a non-income-bearing asset.
- A break below $4,250 may expose the next supports at $4,100 and $3,934/$3,886.
Gold (XAU/USD) has traded below its 50-day moving average since 18 May 206 and remained sluggish.
Last week, the precious yellow metal flashed a significant bearish technical development, declining by 4.7% to $4,328 and recording its first weekly close below the key 200-day moving average since the week of 16 October 2023.
The bulk of last week’s losses came on last Friday’s drop of 3.3%, reinforced by a hotter-than-expected US non-farm payroll data for May, which increased the odds to 73% for the US Federal Reserve hiking 25 basis points (bps) on the Fed funds rate to 3.75%-4.00% on October 2026, and around 70% chance of another 25 bps hike in March 2027 to bring the Fed funds rate higher to 4.00%-4.25%, according to latest data from the CME FedWatch tool (see Fig. 1).
Fig. 1: FOMC aggregated meeting probabilities as of 8 Jun 2026 (Source: CME FedWatch tool). The information presented is historical information, and past performance is not indicative of future performance.
This latest pricing mechanism in the Fed funds futures market has indicated the start of a potential Fed rate-hike cycle, likely to push US Treasury yields higher, which may dampen demand for gold as it is a non-income-bearing asset.
Let’s unpack the latest technicals on gold.
Oscillating within a medium-term descending channel
Fig. 2: Gold (XAU/USD) medium-term trend as of 8 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
Since its current all-time high of $5,602 printed on 29 January 2026, gold (XAU/USD) has been oscillating within a medium-term descending channel.
Last Friday’s bearish breakdown below the key 200-day moving average, combined with the 4-hour MACD indicator's consistent downward trend, has increased the likelihood of a sustained multi-week bearish trend in gold.
Watch the $4,527 key medium-term pivotal resistance (also the 20-day moving average). A break below $4,250 intermediate support exposes the medium-term supports at $ 4,100, and $3,934/3,886 (see Fig. 2).
On the other hand, a daily close above $4,527 invalidates the bearish tone and opens the door to a potential squeeze up to the next medium-term resistances at $4,590/4,645 (also the 50-day moving average) and $4,765.
This article and its contents are intended for educational purposes only and should not be considered trading advice.
