Gold Avoids Breakdown, But Can It Continue?

The gold price has been under pressure due to surging Treasury yields and an increasingly hawkish Federal Reserve. However, despite this unfavorable macro backdrop, gold has thus far avoided a breakdown below its FOMC swing low of $4235.

From a technical perspective, the weekly chart shows that buyers have been stepping in to support the lows, evident from underside wicks on the chart. Nevertheless, the increasing aggression from bears is a concern, particularly as sellers continue to push gold lower on bounces, leading to a series of lower-highs.

Unless bulls can change the tone soon, this bearish pressure sets up for a downside break and a test of a deeper support level, potentially targeting $4100. However, it's worth noting that this wouldn't necessarily spell doom and gloom on a long-term basis, as the same $4k level lurks below.

For the bullish case to gain momentum, buyers would need to step in earlier upon a test of prior resistance in the $4100 area. Meanwhile, a clean zone of resistance from prior support spans the $4300-4320 zone on the four-hour chart, and breaking above this level could open the door for a re-test of the prior week high at $4400.