Is the bull market still here? Gold falls to a two-month low, approaching the $4,370 "life-or-death line"

Is the bull market still here? Gold falls to a two-month low, approaching the $4,370 "life-or-death line"

Gold bulls are facing their toughest challenge since 2026. Under the triple pressure of escalating US-Iran conflict, hawkish signals from the Federal Reserve, and a strengthening US dollar, gold prices have fallen for two consecutive days, dropping to a nearly two-month low and approaching a key technical support that will determine the bull or bear direction.

On Thursday, spot gold saw an intraday maximum drop of 2%, touching around $4365 per ounce. As of now, it trades at $4393.73, down 1.4%.

In terms of news, according to CCTV, US troops struck Iranian military targets near the Strait of Hormuz, and the Islamic Revolutionary Guard Corps immediately claimed retaliation against US bases. Kuwait's air defense systems also announced a response to missile and drone threats, sharply worsening the outlook for peace talks. Meanwhile, Federal Reserve official Lisa Cook said on Wednesday that the inflation trajectory was problematic, and if it persists, the Fed is prepared to raise rates, further dampening market sentiment.

Brent crude prices surged to near $98 per barrel, inflation expectations rose, and bets on a Fed rate cut have retreated sharply. CME FedWatch Tool shows traders currently pricing in zero rate cuts before September, and the probability of an October rate hike is rising. Gold's cumulative decline this week has exceeded 3%, down more than 17% since the outbreak of the Iran war at the end of February, erasing almost all gains for the year.

Triple Pressure Fermenting Simultaneously, Gold Price Under Pressure

This round of decline is not driven by a single factor, but the result of multiple macro headwinds fermenting simultaneously.

The US-Iran conflict is the core variable. The near closure of the Strait of Hormuz, a key energy channel, has continued to push up oil prices since the end of February, causing global economic shocks. Trump said on Wednesday he was "not satisfied" with negotiations with Iran, and did not provide a clear plan to ensure free passage of ships, disappointing market expectations for a quick easing of tensions. Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, said, "The biggest factor remains the Middle East situation," With the continuation of the Iran conflict exacerbating inflation concerns and suppressing gold’s safe haven demand.

The Federal Reserve’s hawkish stance is the second pressure. Rising energy prices are feeding into inflation, pushing up US Treasury yields, with the 10-year Treasury yield holding in the 4.3%-4.4% range, putting real yield pressure on gold which does not generate interest. Officials from the European Central Bank and Bank of Japan also responded, saying that if energy-driven inflation persists, action will be taken.

A strong US dollar is the third pressure. The Bloomberg Dollar Spot Index has risen for three consecutive days, with the Dollar Index standing above 98.5, increasing the holding cost of US dollar-priced gold for many buyers.

200-Day Moving Average $4370: Bull/Bear Dividing Line

Technically, this decline has brought gold back to a critical support level for the second time since 2026, which is receiving high attention from the market.

According to Finance Magnates analysis, the 200-day Exponential Moving Average (200 EMA) is around $4370, currently the most watched technical support. This area converges three signals: the 200 EMA itself, the swing low of March 2026, and the reaction zone of September 2023—gold began its parabolic rally from this region in 2024-2025.

On March 30, gold formed a pin-bar reversal near the 200 EMA, confirming the effectiveness of this level as a defensive line for bulls, with the low then at about $4200. This decline is the second test of this support area in 2026.

If the $4370 region is lost on a daily closing basis, the next clear support is at $4100 (March extended low), and below that is $4000—a level significant as both a psychological round number and a double top from October to November 2025. Analysts point out that, if gold closes below $4000 on a weekly basis amid high volume, it would be the strongest signal that the multi-year bull trend is depleted, with the extreme bearish scenario targeting as low as $3400.

On the upside, immediate resistance is at $4500 (last week's support turned resistance), followed by the 50 EMA at $4660, the April high at $4860, and the historical high region of $5400-$5600 from January 28.

Options Market Confidence Retreats, ETF Holdings Diverge

Signals from the options market are also noteworthy. The world's largest gold-backed ETF—SPDR Gold Trust's implied volatility has dropped significantly, with three-month call option premia near the lowest level since December last year, indicating that traders are withdrawing bullish bets and expectations for large volatility are cooling.

Justin Lin, Investment Strategist at Global X ETFs Australia, said, "Traders are losing faith in the safe-haven narrative; they have better places for their money," such as participating in some newly listed, high-profile stocks recently. He added that if oil prices continue to rise, gold "may view the $4000-$4250 range as support."

However, the trend of ETF physical holdings diverges from price movements. Global gold-backed ETF holdings increased by about 20 tons in April, after a record monthly net outflow in March—the largest in five years. This divergence means this round of decline is not driven by large-scale ETF selling, but more by a re-pricing of macro expectations.

Significant Divergence in Institutional Forecasts, Both Bullish and Bearish Have Grounds

With the sharp price correction, major institutions’ forecasts for gold's end-year trajectory are unusually divided.

Among the bullish camp:

Goldman Sachs analysts Lina Thomas and Daan Struyven maintain a year-end target of $5400, based on central banks buying an average of 60 tons per month and two Fed rate cuts expected in the second half of 2026;JP Morgan maintains a high conviction target of $6300, assuming central bank purchases hit 800 tons in 2026;UBS strategist Joni Teves has a target of $5600;UBP Asia Discretionary Mandate Head Paras Gupta gives a target of $6000, and says the bank is rebuilding its gold allocation from 3% to 6%.

A Reuters survey of 30 analysts shows the median forecast for gold's average price in 2026 is $4746.50, the highest annual consensus in Reuters survey history, about 7% higher than the current spot price.

The bearish argument centers around persistent inflation driven by the Iran war: if the Fed is forced to delay rate cuts or even raise rates, real yields will continue to pressure gold; a strong dollar will further increase holding costs; Finance Magnates analyst Damian Chmiel believes if $4000 support is decisively broken on a weekly basis, the next target could be $3400 in an extreme scenario.

The US PCE inflation data and revised Q1 GDP to be announced on Friday will be the next key macro catalysts to affect Fed policy expectations in the short term. The market is closely watching for their ultimate verdict on the bull-bear structure.

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