Will the breaking of key support lines trigger a prolonged downtrend for gold

Gold has recently broken below multiple rising support lines, a key technical indicator signaling the end of its uptrend and the likely start of a downtrend. After strong gains earlier in 2025, the metal’s price has declined by nearly 1% in June, with technical charts showing a powerful monthly shooting star candlestick pattern that often precedes reversals.

This breakdown is reinforced by consecutive daily closes below support levels, confirming bearish momentum in the market.

Global economic factors influencing gold’s decline

Despite a weakening U.S. Dollar Index, which typically supports gold prices, the metal has struggled to maintain its rally. Factors such as easing geopolitical tensions in the Middle East and a rebound in global equities have reduced safe-haven demand.

Additionally, mixed signals from inflation data and interest rate expectations have contributed to market uncertainty, pressuring gold prices downward despite broader macroeconomic volatility.

Did you know?
Gold has historically acted as a hedge against inflation and currency devaluation, but its price movements often inversely correlate with the strength of the U.S. dollar, making currency trends a crucial factor for investors.

Silver’s performance as a complementary indicator

Silver’s recent decline and its potential to fall below 2024 lows suggest a broader weakness in precious metals. Historically, silver’s short-term outperformance relative to gold has served as a sell signal, and its current underperformance aligns with the technical breakdown seen in gold.

Investors watching the gold-silver ratio may interpret these trends as confirmation of a bearish phase for metals overall.

ALSO READ | Can Gold Break Its Range as Fed Policy and Inflation Data Loom?

Market sentiment and trading strategies amid volatility

Traders are increasingly viewing upward price movements as selling opportunities, given the exhaustion signs near key resistance levels. Contrarian strategies may focus on entering short positions with favorable risk-reward ratios, especially as technical indicators point toward further downside.

However, some analysts caution that gold’s broader trend remains influenced by unpredictable geopolitical and economic events, requiring close monitoring of support zones around ₹95,800 and $3,250 per ounce.

Outlook for gold amid potential USD Index rally

The U.S. Dollar Index is approaching a cyclical turning point, and a potential rally could accelerate gold’s decline. Historically, a stronger dollar exerts downward pressure on dollar-denominated commodities like gold.

As the dollar gains strength, declines in gold and other commodities may intensify, leading to a possible waterfall sell-off in metals markets. Investors should prepare for increased volatility as these dynamics unfold.