Gold drops to a new multi-week low, but bears encounter resistance near the crucial $2600 support level

Gold extended its decline to a new multi-week low on Tuesday, reaching levels not seen since September 20, following Monday’s sharp 2.5% drop.

The precious metal remains under pressure in the short term, with a steep downtrend triggered by Donald Trump’s election victory and anticipated pro-business policies, which have significantly boosted the dollar. So far, the election outcome has overshadowed other key factors—such as geopolitical tensions and global economic concerns—that had recently driven safe-haven demand, pushing gold to record highs.

The latest pullback from the all-time high of $2790 has breached critical support levels, hinting at a potential reversal. Bears have tested the upper boundary of the rising daily Ichimoku cloud at $2616, the higher low from October 9 at $2605, the 38.2% Fibonacci retracement of the $2293/$2790 rally at $2600, and the bull trendline from the $2293 low at $2590.

A decisive break below these levels would confirm a bearish outlook and open the path for a further drop toward $2541 (50% retracement) and $2520 (base of the daily cloud).

Daily technical indicators, including a near-bearish cross on the converged Tenkan/Kijun-sen lines and strong negative momentum, reinforce signals of weakening on the daily chart. However, the $2616/$2590 support zone is significant, and bears are facing resistance here, suggesting a potential pause as markets await October’s U.S. inflation report and Fed officials’ comments on future interest rate direction.

In the near term, the bearish bias is likely to persist while prices remain below the broken $2700 level, now a critical resistance point. Only a solid break above this mark would ease downside pressure, indicating a corrective phase before larger bullish momentum potentially resumes.

Res: 2635; 2658; 2671; 2700
Sup: 2600; 2590; 2541; 2420