XAUUSD continues to decline after losing the key support area around $4,040–4,050.

XAUUSD continues to decline after losing the key support area around $4,040–4,050.

In the previous analysis, this zone was highlighted as an important level for buyers. However, gold failed to consolidate above $4,120 and test the $4,180 resistance, after which the technical picture began to shift in favor of sellers.

Following the break below $4,040, the decline accelerated and XAUUSD moved toward $3,890.

Why is gold falling?

The main fundamental factor remains the rise in U.S. Treasury yields and expectations that interest rates in the United States may stay high for longer.

The yield on the 2-year U.S. Treasury is once again approaching 5%.

This is important for gold because it does not generate interest income. The higher bond yields rise, especially real yields, the greater the opportunity cost of holding gold.

Additional pressure comes from recent U.S. inflation data, which strengthened expectations that the Federal Reserve may maintain a restrictive monetary policy stance.

Even the decline in oil prices below $90 has not yet been enough to significantly change those expectations.

XAUUSD technical analysis

On the hourly chart, the downward move accelerated noticeably after the break below $4,040.

On the daily chart, the sequence of lower highs remains intact, while price continues to trade below important short-term moving averages.

Key levels:

• $4,040–4,050 — former support, now a potential resistance area;
• $4,000 — psychological level;
• $3,900 — current area of local lows;
• $3,850 and below — next area to watch if the decline continues.

What comes next?

Despite the weak technical picture, selling gold after such a significant move lower is becoming less attractive from a risk-to-reward perspective.

A large part of the nearest downside move has already been realized, while the probability of a corrective rebound is gradually increasing.

At the same time, buying simply because gold has fallen sharply is also risky.

In my view, it is now more reasonable to wait for a new market structure.

For short positions, it would be more interesting to see a corrective rebound followed by renewed selling pressure from resistance.

For long positions, buyers would first need to see price stabilization and confirmation that demand is returning.

Fundamental pressure on XAUUSD remains in place: high Treasury yields, restrictive Fed expectations, and a strong U.S. dollar continue to work against gold.

However, after the decline toward $3,900, the key point is not to chase an already extended move, but to wait for a new entry opportunity with a clear risk profile and attractive potential reward.

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