Gold prices have experienced a significant correction after reaching remarkable heights in early 2024, but recent developments show signs of recovery. According to reports from The Hindu BusinessLine, spot gold was down 0.3% at $4,163.64 per ounce by 2:45 p.m ET after hitting its highest since June 22, retreating from two-week highs on Monday. The precious metal climbed from approximately ₹64,000 per 10 gm to around ₹183,000 per 10 gm since February 2024, representing a substantial 186% gain in less than two years with a compounded annualized growth rate of 73%. However, the rally faces a critical technical test as spot gold is currently testing the $2,350–$2,360 resistance zone, with immediate support lying near $2,320 and stronger support at the $2,300 psychological level. A decisive close above the resistance zone could open the door toward $2,400, while failure to hold may lead to a pullback toward $2,300. This latest breakout reflects a powerful combination of revived safe-haven demand, pronounced dollar weakness, and renewed concerns about inflation and policy uncertainty. US gold futures for August delivery settled 1% higher at $4,167.50 per ounce, extending a rebound that began after Friday's weak June jobs report reset expectations for interest rates. However, the dollar gained 0.1%, making the yellow metal more expensive for overseas buyers and reversing part of last week's slide.
The main catalyst for gold's recent recovery was Thursday's disappointing US labour market report from the Bureau of Labor Statistics. Data last week showed a marked slowdown in U.S. job growth in June alongside downward revisions to payrolls for the prior two months, leading markets to scale back expectations of a near-term Federal Reserve rate hike. This weaker employment data immediately reduced expectations that the Federal Reserve would continue raising interest rates later this year, sending the US dollar lower and boosting demand for non-yielding assets such as gold. The shift in market expectations is evident in the latest FedWatch data, where market participants are now pricing in about a 57% chance of a rate hike in September, according to the CME FedWatch Tool. The odds of a July hike fell to 21.9% from 29.9% a week earlier, while the probability of a hold rose to 78.1%. September projections also showed cumulative odds of at least one hike dropping to 53% from 59.4%, with the chance of two hikes falling to 8.7% from 12.6%. Federal Reserve Chair Kevin Warsh also told the European Central Bank forum in Sintra that inflation risks had eased, while reaffirming the commitment to price stability. Investors now await the minutes from the Fed's last meeting, due on Wednesday, as traders examine these minutes for clues about the trajectory of U.S. monetary policy.
The other key driver behind gold's move is the pronounced weakening of the U.S. dollar, which has fallen around 10% over the year in earlier stages of this rally, making dollar-priced gold more attractive for foreign buyers and signaling that currency markets were pricing in lower real returns from U.S. assets. However, the dollar gained 0.1%, making the yellow metal more expensive for overseas buyers and reversing part of last week's slide. A fresh, steep drop in the dollar amplifies this dynamic, as the greenback falls, investors have both a defensive and opportunistic reason to rotate into gold. Gold's appeal is tightly linked to real yields—the inflation-adjusted return on safe fixed-income assets. When nominal interest rates fall or inflation expectations rise, real yields tend to compress, diminishing the relative attractiveness of holding cash or government bonds and boosting gold, which does not pay interest but also does not carry credit risk. While gold is often seen as a hedge against inflation, higher interest rates tend to negatively impact the non-yielding bullion, creating a complex dynamic where dollar strength and rate expectations work against gold's appeal. Jim Wyckoff, a market analyst at American Gold Exchange, called the shift a bearish factor for gold, stating that "the US dollar index is a little higher today and that is a daily bearish element (for gold)".
The decline in gold prices has been compounded by significant outflows from exchange-traded funds, adding pressure to the physical market. According to the World Gold Council, gold ETFs lost 16 tonnes in May, with redemptions continuing into June, representing a concerning trend for the precious metal. Around 298 tonnes of ETF gold are now held at a loss of nearly $4,000, which may cap any potential rallies in the near term. The rolling 90-day flows, which peaked near $30 billion in late February, have since fallen to between minus $5 billion and minus $10 billion, indicating a dramatic reversal in investor sentiment. This shift reflects broader market dynamics where investors have rotated back into technology stocks, pulling capital away from defensive assets like gold. However, the picture is not entirely negative, as central banks bought a net 244 tonnes in the first quarter of 2026, above their five-year average, providing some support for the metal. Fed Chair Kevin Warsh also signaled no rush to raise rates after weak June jobs data, while JPMorgan still sees $4,500 by the fourth quarter and Goldman Sachs targets $4,900 by year-end.
Technical analysis reveals concerning patterns that could drive gold prices lower if key levels are breached. According to BeInCrypto analysis, gold has printed lower highs and lower lows since the January peak, forming a head-and-shoulders pattern on the weekly chart. The left shoulder was priced at around $4,500 in October 2025, the head marks the $5,598 record high, and the right shoulder topped near $4,850 in April. The pattern's neckline rises from November 2025 lows toward $4,200, with price currently trading right at that level. A weekly close below this neckline would trigger the measured target between $2,575 and $2,750, representing roughly 35% downside from current levels. The daily chart shows gold respecting a declining parallel channel, with the midline currently acting as temporary support near $4,141. The channel's lower band is expected to cross the $3,300 to $3,400 support zone by late summer, about 20% below current prices. Resistance is clearly defined at the $4,300 to $4,400 zone, which supported gold from January until early June before flipping into resistance. A daily close above $4,400 would break the channel and challenge the bearish structure, while a weekly close below the neckline would confirm the head-and-shoulders breakdown.
