Gold Drops Below $4,000: Gary Wagner Reveals the New Support Levels

Gold dropped below $4,000 for the first time in months. Kitco technical analyst Gary Wagner breaks down where gold's new support levels sit, why this has become a Federal Reserve and interest-rate story more than a geopolitical one, and the two lines that decide gold's next move.
 
Kitco News anchor Jeremy Szafron speaks with Gary Wagner of The Gold Forecast about gold's break below $4,000, his revised downside support near $3,900, the $4,200 level that would flip the chart back to the bulls, why silver is falling faster than gold, whether a rate hike is now more likely than a rate cut, and if the multi-year gold bull market is rolling over or simply correcting.
 
This interview was recorded on July 16, 2026.

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Transcript

SPEAKER_03 0:00

Gold is right back at the one number Gary Wagner told us would decide almost everything. It's about $4,000 here. Now, last month he gave that floor a 60 to 70% chance of holding, and he still had gold on a path to $6,000. Now, since January, gold has dropped roughly $1,600 off of its high. It's fighting that $4,000 line once again. Silver even falling a bit faster here. So did the floor hold or did it crack? And after a drop like that, is $6,000 gold still on the table? The answers are on the charts. Gary Wagner up next.

SPEAKER_02 0:31

KitCo News, chart this with Gary Wagner.

SPEAKER_03 0:36

All right, welcome back. I'm Jeremy Saffron. With me, of course, Kitco Technical Analyst Gary Wagner from thegoldforecast.com, who's been reading these markets for more than four decades and is very good at turning the charts into plain English. Always good to have you back, Gary. Good to see you.

SPEAKER_00 0:51

Thanks so much for having me, and it's great to be here. Thank you.

SPEAKER_03 0:54

Now I wanted to remind the audience off the bat, obviously we show a spot on the Kitco charts, but you talk futures, and I gotta ask you, I mean, you know, you gave that $4,000 a 60 to 70% chance of holding. The levers kind of, you know, the level kind of buyers keep defending. Um, it broke that this week a little bit and then clawed back, broke it a little bit, clawed back. So, I mean, in your your read, I mean, did that floor hold? Is it damaged now? What are your thoughts, Gary?

SPEAKER_00 1:20

It absolutely has changed in that we're trading slightly below that, and it does appear it's going to be on a closing basis. We're going into the weekend. So we might have a new floor because this floor obviously is not holding. Uh, 4,000 is a strong psychological level, but the traders are going to bid it in where they think it's going, and not necessarily what it is. Of course, the big if is the Fed, but there's almost an expectation that's kind of priced in and inflation, because that could cause or will cause, I believe, the Federal Reserve to act. And if they act, they're going to raise rates. And that's that's poison. The gold is when a fixed asset, guaranteed asset, is producing more revenue, where gold tends to be more speculative, although for hedging it is different. Physical accumulation is different, uh, but not for traders.

SPEAKER_03 2:29

Yeah. Yeah. Hey, Gary, I mean, pull that chart up for a second because I mean we just we're grateful. We're back in the studio after a little bit of time in Florida, but we got to talk a lot about a lot of people. And you know, everyone was jittering, they're a little bit worried. So kind of give me a little exact kind of maybe a closing price that would tell you this floor is is genuinely gone.

SPEAKER_00 2:48

Well, we're looking at a daily chart of gold futures right now. I believe it's on the August contract. And if you notice these two lines here, and this is, of course, about 4,060, and it's really based upon this price activity in November. If you go back to the end of October, you've got this another little floor, and that comes in at about 3934. We obviously cracked this. We have broken below 4,000, and we've tested it. Let me blow this up a little bit. We've tested it a couple of times, but you see they're just wicks, meaning the open and closer represented on a candlestick by the body, closing higher compared to the open is green, closing lower uh compared to the open is red. And but what you really want to watch or look at or look for is these wicks that come in, and they're coming in uh roughly, they're coming in roughly at um about 39, 64, 63 in that area. And that I believe is going to be a critical area now that we have broken through gold, but more importantly, we've closed uh there. And as we go into the weekend, of course, the wild cards are Iran, the the military uh activity, geopolitical potential to cause this market to get excited. But I have to really put a caveat on that because we've seen many asset classes and gold specifically not moving in a A plus B equals C, meaning uh the talk of a rate hike that has obviously moved gold. But then whether there's military action, things that used to be highly supportive of gold have not seemed to have the same effect, which I interpret as what market participants are focusing on, and that is interest rates, uh not geopolitical activity, and putting a priority on interest rates rather than geopolitical scenarios. Yeah. And I don't think it's a pivot as much as we're, you know, we're talking about a rate hike, and we haven't talked about that in quite some time. So yeah.

SPEAKER_03 5:20

Yeah, yeah. I mean, here's what struck me. I mean, you know, gold got stopped inflation data this week. I mean, cooler consumer wholesale prices that rallied on it, then gave that whole move back. Now the dollar and the yields are kind of climbing again with Fed officials openly talking about, as you mentioned, these higher rates. I mean, when a market can't hold gains on the news it wants like that, I mean, what does that tell you? Is it kind of what you just said? They're kind of relying on seeing what's happening here.

SPEAKER_00 5:47

Well, I think it's a double-edged sword. And the other side of the sword is the intense focus on interest rates and what the Fed's going to do. We haven't had a rate hike in a while. There hasn't been talk of that in a while. Uh our new Fed chairman has definitely put that on the table and has supported uh, I believe, a high likelihood that there will be a rate hike, specifically more than we see a rate fall, where no one is really anticipating that. He has come out solidly saying any inflation level above 2% is not acceptable, and we'll do and take whatever steps are necessary to put a ceiling on rising inflation. And the easiest way to do that, or the primary, possibly the only tool of the Fed is rates and raising them when they want to hold a cap on where certain markets are going and where if you peg it on inflation and inflation ticks up, and they've said that's what will cause them to react and implement a rate hike, it changes the scenario in terms of where market participants are focusing on. I don't think they've pivoted, they are reacting to the fundamental events that are occurring uh on a monetary policy basis by the Federal Reserve.

SPEAKER_03 7:17

Yeah, yeah, and the central banks. Um, okay, Gary, let's uh I mean, of course, we're gonna I'm gonna be watching, it's not until August, I think 27th, Jackson Hole, but that's a big one here, too. Um I want to kind of come back to that chart for a second because you you brought up an interesting fact. I mean, we kept getting that resistance of 4,000, and it feels like it would kind of you know be bought up a little bit. You said before that the real proof wouldn't be the bounce, it would kind of be the follow-through buying, buyers stepping back in the day after, not just a one-day pop. I did we actually get that?

SPEAKER_00 7:47

We we do get that. We are not getting that here. What is most, I won't say alarming, but telling of what we're looking at here is on a candlestick chart when the low is equal to or there's very little bottom wick. You can see here it went to these lows, uh 39, 54, 55, but recovered. The real body stayed solidly above 4,000 here and here. We tested 4,08. The next day it came up, and then of course, uh what we're looking at yesterday was a small incremental continuation of that move, but that was not sustainable. Simply put, this low here, when you compare it to the former low, which comes in above 4,000, shows you that we've clearly, at least on an intraday basis and a much higher probability that 4,000 might not hold. If that's the case, because that's what's important, where are we looking for potential support? I mean, is it going to fall hard? I think that if it breaks 39, 32, which is simply based upon this bottom that came in October, then when you look at levels of potential technical support, you know, can you call this a level of support? Not exceedingly strong, but the the key, the most important one is gonna be this, but that's a huge distance. So the key is this what we're looking at right now, based on this bottom right here, puts a floor. If in fact we're gonna close and see any kind of follow-through selling, I'm going to base my revised support at around 3,900 on the low end. The bottom line is when events change and market sentiment changes, then traders react accordingly. And what they're reacting to is they is the 50 or 60 or 70 percent possibility, probability uh that we will see a rate hike. It's really likely that we will see it before we see a rate cut. The question is, if that's the case, when would they act? Would they act at the next FOMC meeting? Would they act September, December, kind of that thing? And that's what traders and market participants are focused upon. Because the probability of a rate hike has gone up, market sentiment changes.

SPEAKER_03 10:40

Yeah, yeah. And I mean, gold, you know, got that stopped inflation data this week and still couldn't really take off. Uh to flip this maybe back to the bulls. I mean, you before were pointing to 4370, then you know, maybe 4,500, the ceilings on the way up. I mean, what where does this stop being just a bounce and start being a real recovery if that happens?

SPEAKER_00 11:02

Well, I'll pull up a study that has been beneficial to me in the past, uh, which is basically a Fibonacci retracement. So here are the different areas that we you can see how it's reacted at certain areas. This particular study is not showing this is an aggressive level of moving lower, but as you can see, we've moved past this line. They put it at 4200 with a potential bottom if it does go much lower than my sentiment. But nonetheless, we could see anything happen if the Fed policy changes, because that's what's going to be most important. Uh, they're focused upon uh the geopolitical uncertainty in Iran, but the focus has really shifted, uh, in which they're putting their priority on inflation and interest rates, because if inflation keeps ticking up, it's the only tool the Fed has.

SPEAKER_03 12:13

Right, right. Uh Gary, I mean, I'm I'm also looking at the charts today, watching Spot Silver. I mean, you're looking at some of the futures, and I gotta ask you about I mean, last month silver had just reclaimed its 200-day average, the line between an uptrend and a downtrend, and you said it needed to kind of hold. Um, it's now lost that line, and it seems to be falling a little bit faster than gold. So, I mean, is silver kind of the warning for the whole complex here? What are your thoughts on the chart?

SPEAKER_00 12:38

I think that when you compare gold and silver pricing, there is an underlying theme of what we expect to happen, and I believe we're seeing that also. Yeah, in times of strong bullish market sentiment, silver will typically outperform gold in terms of percentage gains. On the other side, when there is bearish market sentiment for the precious metals, uh, silver's decline will be a greater percentage than what we see in gold. And so that could be what you're talking about. But when you put these silver and gold side by side, you can see that they both hit an apex. And I do have a chart for that, but I can just illustrate my point. Um May 26, these highs that came in here correspond to the highs in gold. We go to March. If you notice, they occurred at the same time. From there, we had a defined and strong multi-month correction. We're still in it. Now, here's the thing on a technical basis, if it continues to fall, this is the first level of technical support. But market forces and market participants are focusing on the probability of an interest rate hike because that, since gold is a non-performing asset, um, guaranteed fixed returns on treasuries and some and whatnot, shift the attention um to the riskier aspect of gold, which has a potential to move faster and higher than other assets, but also in a correction, it will do the same thing. So that's what they're looking at. The focuses shift because the fundamentals have grown to a point where they're talking about rate hikes, and that is what gold is most sensitive to. Again, gold doesn't bear interest. So when you have attractive returns, because they go up, uh, you you tend to see money move out of many asset classes, including some equities, and into the fixed income arena.

SPEAKER_03 15:02

Yeah, the fixed side. Um, hey, well, I mean, earlier this year, your wave model, the pattern work you track, pointed to kind of $6,000 gold. Last month you softened it saying the top might already be around $5,600. After this pullback, I mean, is is $6,000 still a real year-end target, or has that call changed for you?

SPEAKER_00 15:21

That call has to change. Remember, um I create models and look for certain activities based on past performance. But my mentor that really taught me more than anything else about technical analysis, following markets, and trying to forecast it is that think of a market technician as a worker on a ship and he's sitting at the the the um where the uh propellers come out, the back end of the boat, and he's looking at the waves to determine uh which way the boat will go, not is going, because the waves will determine the direction. But then he would put one huge caveat. But remember, Gary, only the captain knows when he's gonna turn the wheel. If you're just staring out of the ocean and not looking at a map or anything, and you're just watching it, it occurs when action is taken. And that's the same in gold or any asset class to a degree in that it reacts to changes in fundamental policies and monetary policies. Yeah, and that's what we're seeing.

unknown 16:39

Yeah.

SPEAKER_03 16:40

Listen, you talk to a lot of investors, right? And you know, this is kind of the one every gold watcher watching their position in the red kind of always wants answered. I mean, is is this looking at the chart, is is this the healthy kind of pullback every bull market goes through, or is it the start of something that rolls over?

SPEAKER_00 16:58

Well, if we count the beginning of the last strong leg of the rally, which was 39 to a top above 56, but even if you look at the body, it opened at 5400. This is the all-time record high. It comes down and makes a lower high. It then makes a lower low, lower high, lower high, lower low, all the way down. This is a textbook example of a market under pressure. Now, I have a technical level that is now that it's broken, what what I assume could be, I always say potential support, um, but the case is this market is highly, or the market participants are highly focused on interest rates and inflation. And the thing about inflation in this case is it has elicited a verbal response by the Fed. When you see inflation tick up and the and the Fed's still in a wait-and-see pattern or attitude, it will not affect prices as strongly as what we're seeing. But when you have the chairman coming out and talking about and strongly talking about recommending a rate hike, this is the first time that's been put back on the table in a long time. And that's what market participants correctly are reacting to. Changes in fundamental events or changes in the perception of forward monetary policy will always lead the market. The market reacts to what is said, and that's what we're seeing now. So when I said that there was potential support at this level, there was right in here. And when you look at this, this is the lowest low, you know, since quite some time. You've got to go back into 2025. If it continues to break, which obviously it has increased the probability of it with this strong down day, and more importantly, the fact that it's closing near the low, potential support comes in around 3920. And that's just the way we have to view the charts. If we have a model that's looking at a floor, but the fundamental um events or the focus by market participants are aligned to recalibrate because of new statements or new beliefs, such as a rate hike, you're going to see gold, silver react in those ways. All the precious metals are down today. You'll typically get silver having a larger uh percentage decline. But certainly, gold will, I believe, lead the way in terms of that reaction, but silver will move harder in whatever direction. In other words, there is still a high correlation of the moves in gold and silver in a tandem basis, meaning during times of bullish market sentiment in gold, you typically, not always, but you typically get that. Maybe not on a daily basis. We had a couple days this week, at least one that I remember, in which um gold would move in one direction and silver would, you know, silver could move lower and gold was stable. Typically, what we've seen is gold lead, where when that starts to decline, that spills over into uh the precious metals as a whole, because palladium and platinum have much less volume, it has a smaller sense of liquidity. And so if you if you're looking at changes in the precious metal, the go-to is gold. The more speculative one is silver, because if it, as I said, if we're in rally mode, you tend to see uh silver outperform in terms of percentage gains. Reciprocally, if you see a strong selling pressure on the precious metals, you will many times see silver on a percentage basis uh outperform gold.

SPEAKER_03 21:24

You trade these markets. I mean, you're trading them right now. Typically, too, Gary. I mean, a little bit of thinner trading in summer. I mean, that seasonality right now, the old classic. I mean, have you seen that too?

SPEAKER_00 21:35

Well, absolutely. You're always going to get a percentage of the trading pool, you know, move away uh during the summer months, but they're still bringing in their hedgers, their um market analysts, and their traders even during the summer. But typically the the primary traders of a fund or a pool uh will take less time studying the markets in the summer than they will come September. And that's when you see a spike in the volume. But whether that pushes gold up or down is going to be a continuation of market sentiment that preceded it, not necessarily a pivot.

SPEAKER_03 22:22

Yeah, well said. All right, Gary Wagner, goldforecast.com. Thanks for making the time, as always, Gary. Appreciate it.

SPEAKER_00 22:28

Thanks so much for having me and uh happy trading, even though we've got to overcome this. But that's okay. Markets don't go straight up, never have, never will. And they never will.

SPEAKER_03 22:40

Never will. All right, man. Appreciate your time. And uh for the audience, I mean, it seems like it comes down to the two lines you can keep in your head above 4100. This recovery starts to earn some trust. Below that 3920, as uh Gary just mentioned. The chart opens the door to maybe a deeper decline. And silver's already showing you which way the wind is turning. Now, these are numbers that we'll track into the next week. Uh tell us in the comments what I mean, which one do you think breaks first? I'm Jeremy Safford. Thanks for watching Kitco News.

SPEAKER_02 23:07

Kitco News, chart this with Gary Wagner.

SPEAKER_01 23:12

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