Gold Dives to Two-Month Lows, $4370 Key Support in Jeopardy

Gold bulls are facing the toughest test since 2026.

On Thursday, spot gold fell as much as 2% during the day and touched around $4,365 per ounce at one point. As of press time, it is reported at $4,393.73, down 1.4%. The cumulative decline for the week has exceeded 3%, and it has fallen more than 17% since the outbreak of the Iran war at the end of February, nearly erasing the gains for the year.

This round of decline is driven by three macro headwinds simultaneously. First, the US-Iran conflict escalates again—The U.S. military carried out strikes on Iranian military targets near the Strait of Hormuz, and the Islamic Revolutionary Guard Corps immediately claimed a counterattack, dramatically worsening the prospects for peaceful negotiations, and Brent crude oil subsequently surged to near $98 a barrel. Peter Grant, Vice President of Zaner Metals, stated, "The biggest influencing factor is still the situation in the Middle East"; ongoing conflicts intensify inflation concerns, which paradoxically suppress the safe-haven demand for gold.

Second, the hawkish signal of the Federal Reserve Bank is heating up—Official Lisa Cook said on Wednesday that if inflation persists, she would be prepared to raise interest rates. CME data shows that traders are currently pricing in zero interest rate cuts before September, and the 10-year U.S. Treasury yield remains in the range of 4.3% to 4.4%, which keeps putting continuous pressure on gold, which does not generate interest.

Third, the strengthening of the U.S. dollar—The Bloomberg Dollar Spot Index rose for the third day in a row, and the U.S. dollar index stood at 98.5 above, increasing the holding cost of gold.

Technically, the area around $4,370, where the 200-day exponential moving average (200 EMA) is located, is the current most watched line between bulls and bears. This area also gathers multiple support signals such as the low point of the March 2026 wave and the reaction area in September 2023.

In March of this year, the gold price formed a needle-like K-line reversal in this area, and this time it is the second test of this key position within the year 2026. If $4,370 is breached based on the daily closing, the next support is at $4,100, and below that is the psychologically significant $4,000.

Analysts point out that if gold prices break through $4,000 in a high volume scenario on a weekly closing basis, it will be the strongest signal that the long-term bull market trend has been exhausted, and the extreme scenario target price could go as low as $3,400.

The confidence in the options market is also receding. The implied volatility of the State Street SPDR Gold Fund has plummeted, and the premium for call options in the next three months is close to the lowest level since December last year. However, the physical holdings of global gold ETFs and price trends have diverged—holdings increased by about 20 tons in April, indicating that this round of decline is not driven by a large-scale clearing of ETFs, but rather reflects a re-pricing of macro expectations.

The divergence in institutional views on the year-end trend has reached a historical high. Among the bulls, Goldman Sachs maintains an end-of-year target of $5,400, JPMorgan Chase has a target as high as $6,300, and UBS targets $5,600; a Reuters survey of 30 analysts shows that the median forecast for the average gold price in 2026 is $4,746.50, the highest annual consensus in the history of the survey. The bearish logic focuses on the scenario where sustained inflation forces the Federal Reserve Bank to delay rate cuts and even raise rates, with real yields suppressing gold prices in the long term.

The upcoming U.S. PCE inflation data and the first-quarter GDP revision will be the next key catalyst affecting the short-term bull-bear pattern.