Gold continues to trade just below the $ 4,000-per-ounce mark after a sharp sell-off at the beginning of this week, as progress in trade negotiations between the U.S. and China undermined demand for safe-haven assets.

This level is also psychologically important; a breach below it could trigger further selling, as short-term traders are likely to close their long positions, adding fuel to the bearish trend. However, despite the current price weakness, the fundamental factors supporting gold demand remain significant. Geopolitical tensions, rising concerns about global economic growth, and ongoing uncertainty about central banks' future monetary policy remain supportive factors. Traders worried about a potential recession still view gold as a reliable store of value during times of instability.

Demand for gold from central banks remains robust as countries strive to diversify their reserves and reduce dependence on the U.S. dollar. A key factor to monitor in the coming weeks will be the progress in trade negotiations between the U.S. and China. If discussions stall again or trade battles escalate, demand for gold is likely to increase, pushing prices back toward $4,000 and beyond. Conversely, gold may remain under pressure until new catalysts for its rise emerge.

On Tuesday, the price of gold fell to $3,973 following a 3.2% decline in the previous session. However, since the beginning of the year, gold has risen by over 50%.

This current decline may present an opportunity for major traders and central banks to increase their purchasing volumes. The Bank of Korea, which last bought gold more than 10 years ago, is considering additional purchases in the medium- to long-term.

It is also expected that the Federal Reserve will cut interest rates by 25 basis points during its two-day meeting, which concludes on Wednesday. Rate cuts are typically favorable for gold and its price.

Regarding the current technical picture for gold, buyers need to reclaim the nearest resistance level of $3,954. This will allow them to aim for $4,008, above which breaking through will be quite challenging. The farthest target will be the area around $4,062. If gold falls, bears will attempt to take control around $3,906. If successful, breaking through this range would deal a serious blow to bullish positions and could push gold down to at least $3,849, with the prospect of reaching $3,802.