Finam Analyst Warns How Low Gold Can Fall Before the Next Buying Opportunity

Gold prices fell to a 40-year low of $4,354 per ounce in late March 2026 amid the Federal Reserve's hawkish stance. The Fed left rates unchanged in the 3.50%-3.75% range and reduced expectations for rate cuts, impacting gold demand. The move came as markets recalibrated their inflation expectations and economic outlook.

The price breakdown below the 50-day moving average at $4,960 triggered a medium-term bearish trend. Analysts note the recent correction is not a one-off event but the start of a potential multi-week downward move. The 200-day moving average of $4,154 is now a key target for further declines.

ETF outflows and reduced central bank buying have further pressured gold prices. January 2026 saw only 5 tonnes of net purchases, far below the 2025 monthly average of 27 tonnes. ETF flows remain sensitive to U.S. monetary policy.

Why Did This Happen?

The Federal Reserve's decision to maintain rates in a hawkish stance crushed market expectations for rate cuts. Strong economic growth and stable labor markets reduced the urgency for policy easing. Inflation remains "somewhat elevated," according to Fed officials, who expressed uncertainty about the economic outlook.

The decision to keep rates unchanged came with a 11-to-1 vote, signaling internal support. The Fed also revised its core PCE inflation forecast upward to 2.7% for 2026. These changes made gold less attractive as investors shifted toward yield-bearing assets.

How Markets Responded

Gold's bearish breakdown below key support levels has triggered a wave of stop-loss selling. The recent 50-day moving average breach confirmed a shift in sentiment among traders. Analysts now expect the 200-day moving average of $4,154 to be the next major target.

India's gold market is also experiencing indirect effects from the global price drop. Customs duties on gold imports are tied to a notified value, which is updated frequently in response to price volatility. The INR has weakened by 1.6% against the USD in March, compounding domestic affordability issues.

What Are Analysts Watching Next?

Despite the sharp correction, analysts see long-term buying opportunities for gold at current levels. Phillip Nova's Priyanka Sachdeva noted that the drop below $4,400 has opened the door to the 200-day moving average. Investors are advised to consider "staggered" accumulation strategies.

Central banks continue to show structural interest in gold, although near-term price movements are likely to be driven by ETF flows. The return of buyers like Malaysia and potential participation from the Bank of Korea suggest a broadening of demand.

The Fed's policy path will remain the key driver for gold prices in the near term. A shift toward rate cuts later this year could trigger renewed ETF inflows and provide a floor for the market. Analysts are closely monitoring economic data for signs of a slowdown that could force the Fed to reconsider its stance.

The current environment highlights gold's evolving role as a safe-haven asset. While geopolitical tensions persist, the metal has struggled to maintain its traditional appeal. Investors are advised to stay cautious and balance exposure to gold with other macroeconomic signals.