Gold trades near $4,020, down 28% from its January record of $5,598, as markets await the July 29 FOMC decision with CME FedWatch pricing a 35.8% chance of a surprise hike and weekly indicators (RSI 37) confirming a bear market. US-listed gold ETFs saw roughly $5.3 billion in monthly redemptions while central banks bought a net 244 tonnes in Q1 and 45% plan to add more; technical support sits at $3,900 (a break risks a drop to $3,552) while reclaiming $4,300–$4,400 is the first recovery target, a dynamic likely to affect crypto and DeFi risk flows and safe-haven demand.

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In Brief

Gold trades near $4,020, down 28% from its January all-time high.
CME FedWatch shows 35.8% odds of a surprise Fed rate hike on July 29.
A break below $3,900 support could expose the $3,552 golden pocket.

Gold trades near $4,020, down 28% from its January record of $5,598, ahead of Wednesday’s Federal Reserve decision. The gold price outlook for August 2026 hinges on two key technical levels.

Weekly momentum indicators point lower, yet volatility compression suggests a decisive move is near. Meanwhile, central bank demand continues to offset heavy ETF redemptions.

Fed Decision on July 29 Sets the Tone

The Federal Open Market Committee (FOMC) announces its rate decision on Wednesday, July 29. CME FedWatch data shows a 64.2% probability of a hold at 350 to 375 basis points. However, traders still price a 35.8% chance of a hike to 375 to 400.

Fed July rate hike probability / Source: CMEGroup

That hike risk remains elevated even though all 104 economists in a Reuters survey expect a hold. June inflation cooled to 3.5%, with core at 2.6%. Nevertheless, Fed Chair Kevin Warsh has refused to soften his stance.

“There might be some that look at this morning’s data and say, ‘Oh, mission accomplished, everything is swell.’ That is not my view.”

Warsh made the comment after the June inflation report, as reported by CNBC.

Geopolitics adds another variable. The pause in US-Iran strikes sent oil down roughly 6% and eased inflation fears. A breakdown in those talks could revive both safe-haven demand and rate-hike pressure in August.

ETF Outflows Slow While Central Banks Keep Buying

Higher-for-longer rates have drained ETF demand. US-listed gold funds recorded roughly $5.3 billion in monthly redemptions. Rolling 90-day flows swung from nearly $30 billion in February to negative territory. Around 298 tonnes of ETF gold now sit underwater near $4,000.

However, the chart below shows the 30-day flow change narrowing back to near zero in late July. Selling pressure appears to be fading rather than accelerating as the price defends $4,000.

Gold ETF 30-day flow change vs gold price / Source: BoldReport

Central banks provide the counterweight. They bought a net 244 tonnes in the first quarter. Moreover, a record 45% plan to add more, according to a World Gold Council survey. Fund managers also called gold the most undervalued since March 2023.

Weekly Charts Confirm Gold Bear Market

The weekly structure still favors sellers. Gold lost the 0.382 Fibonacci retracement zone between $4,300 and $4,400 in June. That area now acts as resistance. The price currently sits on the 0.5 retracement at $3,943, inside the $3,900 to $4,000 support zone.

Moreover, gold has closed below the midline of its long-term Gaussian channel for three consecutive weeks. That is a continuation of the bearish signal that first appeared in mid-July.

XAU weekly chart / Source: Tradingview

The weekly Relative Strength Index (RSI) strengthens the bearish case. The indicator broke its ascending support line from September 2022 in early June. It now reads 37, its lowest level since late 2023. Combined with a 28% drawdown, this meets the common bear market definition.

Still, readings near 37 marked major cycle lows in 2022 and 2023. Therefore, downside momentum may be closer to exhaustion than to a fresh acceleration.

XAU weekly RSI chart / Source: Tradingview

Gold Price Outlook Hinges on $3,900 Support

The daily chart compresses the decision into a narrow apex. A descending resistance line from the $5,598 peak has rejected the price four times. That line now converges with the $3,900 to $4,000 support zone. Gold also trades 10.4% below its 200-day moving average, which has flattened and turned lower.

At the same time, the Bollinger Band Width Percentile (BBWP) shows volatility fading into a squeeze. Historically, such compression precedes an expansion move in either direction. The FOMC decision is the obvious trigger.

XAU daily chart / Source: Tradingview

If support holds and gold reclaims the trendline, the first target is the $4,300 to $4,400 resistance zone. Reaching the 0.382 level at $4,333 would mean a gain of about 7.8%. JPMorgan’s Q4 forecast of $4,500 sits just above that zone.

Conversely, a daily close below $3,900 would invalidate the bullish case. The next support waits at the 0.618 golden pocket near $3,552, roughly 11.6% below the current price. The $3,300 to $3,400 zone stands below it.

August opens with gold pinned between a four-touch trendline and its last major support. Whichever level breaks first should define the rest of the quarter.

Read the article at BeInCrypto