On Tuesday, spot gold fluctuated around the US$4,000 per ounce level as bulls and bears battled for control, with the metal on track to post its largest quarterly decline in 13 years. Earlier in the day, gold briefly fell to US$3,943.66, marking its lowest level of 2026.

At the end of January this year, supported by a weaker US dollar, continued gold purchases by central banks, and a surge of retail speculative inflows, gold climbed to a record high of nearly RMB 5,600. Since then, concerns over the Federal Reserve shifting back toward interest rate hikes have intensified, the US dollar has continued to strengthen, and a large amount of retail speculative capital has rotated into other speculative assets, resulting in a cumulative decline of nearly one-quarter in gold prices.

According to Dow Jones market data, gold has declined by approximately 13% in the second quarter, marking its largest quarterly correction since the second quarter of 2013. Bulls regard the US$4,000 level as a key psychological support and are defending it firmly. Bears, however, believe that if this level is breached, the market could trigger another wave of concentrated selling.

Saxo Bank stated that gold prices remain highly influenced by expectations of Federal Reserve interest rate hikes. Previously, higher oil prices increased inflationary pressure, which continued to weigh on gold prices.

After gold fell below the US$3,960 low last week, bears failed to maintain sustained downside momentum. Short covering emerged in the market, while falling energy prices and easing concerns over inflation due to a temporary oversupply of crude oil encouraged bargain hunting, jointly lifting gold back above the US$4,000 level. However, for investors to regain confidence in establishing long-term bullish positions, gold must firmly hold above US$4,100 before a medium-term bottom can be confirmed.

Swissquote Bank defines US$4,000 as the key support level. Until gold recovers above US$4,115, downside risks remain. Bears are targeting the next downside level at US$3,680, which is both the lower boundary of the long-term uptrend and the 50% Fibonacci retracement level of the current bull market.

Market Analysis:

On the 4-hour chart, gold has retreated once again, with both the MACD lines and the histogram expanding around the zero axis. From a long-term perspective, gold's allocation value remains favourable. Last quarter, multiple central banks sold part of their gold reserves to offset rising energy prices, and there may be demand to replenish those reserves in the future. The only uncertainty is the price level at which central banks choose to repurchase. Seasonal factors may provide short-term support for gold prices.