Gold Technical Analysis: The Lower Channel Is Being Tested Again

Compared with my previous analysis, gold has moved significantly lower and is now testing the lower boundary of my rising channel around the $4,100–4,150 area. After reaching almost $4,900 in September, the correction has been aggressive, but the most interesting thing on the chart right now is that the long-term rising structure is being tested — not broken.

The lower channel is finally being tested

Gold closed Friday around $4,140, down about 0.9% on the day. The move is quite significant when we look at the bigger picture: the market has fallen from the September high around $4,900 and is now approaching the lower boundary of the rising pink channel that has been developing for months.
This is exactly the type of area where I become much more interested in the chart.
The channel has already provided a number of reactions, and its lower boundary is now sitting roughly around $4,100–4,150.
So far, price is respecting it.
That doesn't mean the correction is over. But it does mean that gold has reached a technically important area where the market needs to make a decision.

The structure is still bullish — but under pressure

The bigger picture remains quite interesting.
Gold made an enormous move during the first half of the year, eventually reaching above $5,400 before entering a much deeper correction. The market then formed a series of lower highs and lower lows during the correction, but the larger rising channel from the 2025/early-2026 structure has remained visible.
The white descending trendline that dominated the correction has already been broken.
That was an important technical development.
What we are seeing now is therefore not simply a continuation of the original downtrend. Instead, gold is correcting inside a much larger rising structure.
And that distinction matters.
As long as the lower channel survives, I would still consider the current move a correction within the larger structure rather than a confirmed reversal of the entire trend.

$4,100–4,150 is the area I am watching

The current price around $4,140 is sitting almost directly on the lower channel.
There is also a horizontal support area around $4,000–4,100, with the current demand zone extending roughly from $4,000 toward $4,300.
That gives us an interesting confluence.
The market is approaching:

• the lower rising channel
• the $4,100 area
• the current demand zone
• previous price reactions around $4,000
  This is why the next few daily candles could be quite important.
  If gold can stabilize here and begin producing higher lows again, the current correction could eventually turn into another attempt higher.
  If the channel breaks decisively, however, the picture changes.

What happens if the channel holds?

If the lower channel continues to work, the first level I would watch is around $4,300–4,400.
That area has already acted as an important reaction zone and is currently the first major obstacle above the market.
Above that, we have approximately $4,500–4,550, where my rising purple moving average is currently located around $4,536.
The dashed midpoint of the rising channel is also approaching this region.
This makes $4,500–4,550 a particularly interesting technical area.
If gold manages to reclaim it, the next important zone is around $4,700–4,900.
That is where the previous major rejection took place.
And above that sits the much larger supply area around $5,100–5,250, followed eventually by the previous record area above $5,400.

The channel is dynamic

One thing I want to emphasize again is that these channel levels are not static numbers.
The channel is rising.
That means the lower boundary moves higher with time, the midpoint moves higher and the upper boundary moves higher as well.
So when I say that the lower channel is currently around $4,100–4,150, I don't mean that $4,100 will remain the relevant support forever.
If the structure continues to develop, the same channel could be sitting considerably higher several weeks from now.
This is one of the main reasons I prefer looking at the structure itself rather than treating every horizontal price level as permanent.

And what if the channel breaks?

This is the bearish scenario I am watching most closely.
A simple intraday wick below the channel would not be enough for me.
What I would want to see is a convincing daily close below the lower channel, followed by an inability to reclaim it.
If that happens, the next important area on my chart is around $4,000.
Below that, the larger demand area around $3,900–4,000 becomes relevant.
Further down, we have the much stronger structural zones around $3,700–3,800 and eventually the large $3,200–3,300 area.
Obviously, that would represent a very different market structure from what we have today.
But for now, we are not there.
The channel is still holding.

Fundamentals are making this correction even more interesting

And this is where gold gets complicated.
Normally, a weaker-than-expected U.S. employment report would be supportive for gold because it can reduce expectations for further Federal Reserve tightening.
And that is exactly what initially happened today.
The U.S. economy added only 29,000 jobs in September, compared with economists' expectation of around 90,000. The unemployment rate increased to 4.2%. Following the report, markets reduced expectations for an October Fed rate hike to below 20%. Investing.com
Gold initially jumped more than 1% after the report.
But then something interesting happened.
The dollar remained relatively strong and Treasury yields remained extremely elevated. The 10-year Treasury yield has been around 5.3%, while 30-year yields have also reached their highest levels since 2002. Reuters
And that is a major problem for gold.
Gold doesn't pay interest.
When investors can get very high yields from U.S. government bonds, the opportunity cost of holding gold becomes much higher.
So we have an unusual situation where weak employment data should theoretically help gold through lower rate expectations, but extremely high bond yields are working in the opposite direction.

The Fed remains a major driver

The Federal Reserve raised rates by 25 basis points in September, and policymakers have indicated that another hike later this year remains possible if inflationary pressure persists. After today's employment report, however, markets significantly reduced the probability of an October hike. Investing.com
For gold, this creates a very interesting battle.
On one side:
weaker labor market → lower expectations for rate hikes → potentially positive for gold.
On the other:
high inflation concerns + extremely high Treasury yields + strong dollar → negative for gold.
Right now, the second side is winning in the short term.
Reuters reported that spot gold was heading for a weekly decline of roughly 3.4%, with the stronger dollar and elevated Treasury yields weighing on the metal. Reuters

Geopolitics are not automatically bullish anymore

This is another interesting part of the current market.
Gold is traditionally considered a safe-haven asset, so geopolitical escalation would normally be expected to support it.
But the current environment is more complicated.
The conflict in the Middle East has contributed to higher energy prices and inflation expectations, which can push bond yields higher. That can partially offset the traditional safe-haven demand for gold.
So even with significant geopolitical uncertainty, gold can still fall if the market believes that the resulting inflationary pressure will keep monetary policy tighter for longer.
This is something I think is easy to overlook when looking only at headlines.

My current scenario

For now, I am keeping the technical picture relatively simple.
Bullish scenario: The $4,100–4,150 area holds → gold recovers toward $4,300–4,400 → $4,500–4,550 → eventually $4,700–4,900.
Bearish scenario: A confirmed daily break below the lower rising channel → $4,000 becomes the first major target → below that, $3,900 and potentially $3,700–3,800.
The most important thing for me is what happens around the lower channel.
After the huge correction from almost $4,900, I don't think it makes much sense to chase every short-term move.
This is now a location where the market needs to show us what it wants to do.

Conclusion

Compared with my previous analysis, gold has now moved considerably lower and reached the most important technical area on my chart.
The market has fallen from the $4,900 region all the way toward $4,140, and the lower boundary of the rising channel is now being tested.
For me, this is the key point.
The channel has been developing for months, and its lower boundary is now being tested for a reason. If buyers can defend it and gold starts forming another sequence of higher lows, I would be watching $4,300–4,400, followed by $4,500–4,550 and eventually the $4,700–4,900 region.
But if the channel breaks decisively on a daily closing basis, I would stop treating the current move as just another correction inside the rising structure and start watching $4,000 and below.
Fundamentally, the situation is equally interesting. Today's weak U.S. jobs report reduced expectations for an October Fed hike, which initially helped gold, but extremely high Treasury yields and a strong dollar continue to create significant pressure. Reuters
So once again, I think the chart gives us a relatively clear level to watch.
The lower channel is being tested. If it holds, the higher-low structure can survive. If it breaks, the whole picture changes.