Gold drop looks to run deeper on break under $4,000

At long last, this might be it. The time for gold to finally meet with its correction to the downside after the surging upside run for the better part of the year. It seemed like things were stalling from end April to August only for it to go on a tear again in September and the first half of October trading. But now with a break back under $4,000, are we going to see a much deeper correction/retracement?

The tea leaves look to be pointing in that direction for the moment at least. Dip buyers seem to be exhausted. Fed rate cuts have been fully priced in to the extent as necessary. Geopolitical tensions have subsided. And markets are feeling optimistic about US-China developments ahead of the Trump-Xi meeting this week.

The near-term chart above also shows a clear break under the key hourly moving averages with gold now holding well below said key levels. The last time price action showed suggestions of breaking lower under the key hourly moving averages was back in July and August trading. That’s quite a long stretch without a break in the upside momentum. As such, the drop now could see a much shaper decline amid a significant shift in price action momentum.

The 50.0 Fib retracement level of the swing higher from the end of August to the peak earlier this month holds around $3,846. And that will be a key target to watch with sellers treading water below the 38.2 Fib retracement level at $3,972 currently. Thereafter, there’s further scope to run towards the 61.8 Fib retracement level at $3,720.

And in the bigger picture, the 100-day moving average currently stands at $3,566. And that will be a major target to watch out for in the event this correction runs much, much deeper. The 100-day moving average has been where dip buyers have been drawing the line in the run higher for gold ever since February 2024. Other previous tests include that in November and December 2024 as well as July and August 2025. All of which saw the 100-day moving average hold. So, that will be a key one to be mindful of.

For some context, even if we do see price fall back to the 100-day moving average from here, gold will still be up some 36% this year. Bonkers, ain’t it? It’s time to wait on that opportunity to pile in on more longs by year-end. Finally!

This article was written by Justin Low at investinglive.com.