Gold Price Forecast: XAU/USD Breaks Trendline Support Near $4,950 – Is $4,808 Next?
Gold (XAU/USD) is facing its biggest technical challenge of the first quarter. Early Tuesday, it dropped below the key $4,950 level...
Quick overview
- Gold (XAU/USD) has dropped below the key $4,950 level, trading between $4,880 and $4,990 due to low holiday trading and a stronger U.S. Dollar.
- Asian market closures for the Lunar New Year have reduced buying power, contributing to the recent price decline.
- Despite the drop, analysts believe this is a normal consolidation within a long-term upward trend, supported by strong central bank demand.
- The outlook remains bearish for the week if gold stays below $4,955, with potential testing of the $4,808 support level.
Gold (XAU/USD) is facing its biggest technical challenge of the first quarter. Early Tuesday, it dropped below the key $4,950 level and traded between $4,880 and $4,990. This 1 to 2.3% decline is a clear move away from last week’s $5,000 range, mainly due to low holiday trading and a stronger U.S. Dollar.
The “Holiday Squeeze”: Why Gold is Tanking Today
The recent price moves are mostly due to a lack of liquidity in major global markets.
- Asian Closures: Asian markets are closed for the Lunar New Year, which has taken away a large amount of both physical and speculative buying power.
- S. Dollar Strength: After the Presidents’ Day holiday, the U.S. Dollar Index (DXY) rose by 0.2%, which put immediate pressure on gold prices.
- Geopolitical “Cooling”: Tensions have eased in important negotiations in Geneva and Oman, causing the “fear premium” that pushed gold to $5,600 in January to fade for now.
Fundamental Pillars: The 2026 Structural Bull Case
Even with the recent drop, institutional analysts see this as a normal consolidation within a long-term upward trend.
1. Central Bank “Sticky” Demand
Central banks continue to be the main buyers. J.P. Morgan and UBP expect them to buy between 755 and 850 tonnes in 2026, which is more than 26% of yearly mine production. This strong demand helps support prices in a way not seen in past decades.
2. The Real Yield Divergence
Usually, gold prices drop when real yields go up. But in 2026, gold has stayed strong even with talk of higher interest rates lasting longer. This shows that worries about U.S. debt ($38 trillion) and currency value are now bigger factors than interest rates alone.
3. Investment Rebalancing
In 2025, both retail and institutional ETF inflows were the highest since the 1970s. In January, margin requirements increased from 6% to 8%, which forced some speculators out of the market. Now, the market is left with stronger, more committed participants.
| Demand Sector | 2025 Actual | 2026 Projection | Change % |
| Central Banks | 863 Tonnes | 850 Tonnes | -1.5% |
| ETFs | 801 Tonnes | 830 Tonnes | +3.6% |
| Jewelry | 1,890 Tonnes | 1,920 Tonnes | +1.6% |
Gold (XAU/USD) Technical Analysis: Is $4,808 the Final Floor?
On the 2-hour chart, XAU/USD has formed a clear bearish candle below the 200-period moving average at $4,954.
Key Levels for the Week
- Critical Resistance ($4,950): What was once support is now resistance. Gold needs to move back above this level to stop the downward trend.
- Immediate Support ($4,880): Today’s intraday battleground.
- Major Technical Target ($4,808): If prices keep falling, this is the next important support level where buyers may step in.
- Psychological Ceiling ($5,119): If gold rises above this level, it would likely mark the end of the mid-February correction.
The Verdict: Weekly Bias
For the week of February 17, 2026, the outlook is bearish if gold stays below $4,955.
Trading is likely to stay light and unpredictable until the Lunar New Year holiday ends on February 23. Gold may move down to test the $4,808 level, where large buyers are expected to return.
Trade Idea: Look to short gold if any rallies fail below $4,950, aiming for a target of $4,810. Use a stop-loss above $4,955 to protect against a sharp reversal.
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