Gold (XAU/USD) recovers from 9% plunge, technical bias remains firmly bearish below $4,500/oz

• Gold (XAU/USD) plunged to a four-month low, recording its worst week in 43 years, primarily driven by dominant macro factors over geopolitical concerns.
• Markets now pricing out 2026 rate cuts from the Federal Reserve.
• The technical bias is firmly bearish after a breakdown below the key $4,500 support, compounded by persistent ETF outflows

Most Read: Farewell, Rate Cuts – Markets Weekly Outlook

Gold prices experienced a significant shift on Monday as the market reacted to geopolitical developments. Spot gold initially plunged as much as 9%, hitting a four-month low and marking its ninth consecutive session of losses.

However, the precious metal managed to recover some of those earlier declines after US President Donald Trump announced a delay in potential strikes against Iranian energy infrastructure and power plants. Ahead of the US Open, gold had pared its steepest losses to sit down 1.8% at $4420/oz.

The precious metal turned green on the day briefly before resuming its decline from around the $4500/oz handle.

One of the key reasons for the sharp selloff in Gold which saw the precious metal record its worst week in 43 years last time out is the changes to the monetary policy path for the Federal Reserve.

Markets are no longer pricing in rate cuts in 2026, this according to the latest LSEG data, Over the last week markets have slashed the probability of rate cuts to 0, with markets now pricing in around 2 bps of rate hikes through December 2026.

This shift in trajectory stems from the concerns around energy prices and inflationary pressure moving forward. The chart below shows the correlation in play at the moment between rising Oil prices and the fall in gold prices.

One thing has become clear though, Geopolitics is not enough to keep gold prices on the offensive in the current environment.

The macro picture is in part tied to the geopolitical developments which makes the outlook and developments even more intriguing and volatile for market participants.

This was evidenced by the reaction to President Trump's tweet about postponing strikes on Iran's energy infrastructure and his claim of talks with the Iranian government, The tweet was followed by a 12% drop in oil prices which in turn probably lent support to Gold recovery back toward the $4500/oz handle.

Exchange-traded fund (ETF) dynamics are also playing a role in gold's valuation, as persistent outflows in recent weeks have exerted significant downward pressure on prices.

These liquidations have effectively aided the reverse of a large portion of the gains seen earlier this year since the onset of the conflict with Iran. This trend aligns with the historical correlation between ETF positioning, spot prices, and shifting expectations for US monetary policy.

If we see a recovery in institutional flows, this could in part aid a gold rice recovery and may be worth keeping an eye on.

For those looking at the bigger picture, the recent pullback in gold prices may be seen as an opportunity. However, there are various factors at play for market participants to consider.

I for one remain optimistic of a price recovery, but this will still hinge on how geopolitical headlines shape inflation, monetary policy expectations and real interest rates moving forward.

Technical Outlook - Gold (XAU/USD)From a technical standpoint, XAU/USD (Gold) is currently experiencing a severe bearish breakdown, characterized by a loss of key psychological levels and a shift in medium-term momentum.

The price has aggressively breached the major support zone at $4,500, which now acts as immediate overhead resistance.

Moving Averages & Trend

We are seeing a "Bearish Crossover" where the shorter-term SMA 50 has crossed below both the 100 and 200 SMAs. This indicates that the medium-term trend has officially shifted from bullish to bearish.

The wide gap between the current price (approx $4450) and the SMAs suggests the move is "overextended" to the downside, but the slope of the averages remains steeply negative.

Support and Resistance Levels

Immediate Resistance: $4,500 (Black Horizontal Line). This was a major "floor" that has now been shattered.

Secondary Resistance: $4,688.51 (Purple Line). This represents the last swing high before the most recent leg down.

Current Support: Immediate support rests at $4400/oz before the $4250 and the daily low at $4100 comes into focus.

The current price action is highly volatile, with long "wicks" on the candles indicating significant intraday battles between buyers and sellers.

However, as long as the price stays below the $4,500 level, the technical bias remains firmly bearish.

Gold (XAU/USD) One-Hour Chart, March 23, 2026

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda