Gold prices faced another sell-off last week as US Treasuries gained traction and tech stocks continued their decline. Next week, the Federal Reserve is widely expected to hold rates steady but hint at a hike in December. Historically, the nuances of the Fed's press conference have significantly impacted gold prices, as seen in June and July.
The precious metal experienced a dramatic rise after breaking through $2,000 in February 2024, fueled by expectations of Fed rate cuts despite high inflation. This rally peaked at $2,790 before a two-month pullback, after which bulls regained control. The only notable pause in this upward trend occurred ahead of the Jackson Hole Economic Symposium last year, when Fed Chair Jerome Powell's cautious stance on tariffs and inflation tempered market expectations.
In 2026, inflation concerns initially led to a more hawkish Fed stance, dampening gold prices in the first half of the year. However, the $4,000 level proved crucial, holding support for two months earlier this summer. This week marked the first time gold closed below that level, signaling a potential shift in market dynamics. The sell-off is driven by capital flowing into Treasuries for higher yields and fears of sustained inflation and a hawkish Fed policy.
Looking ahead, the $4,000 break is still fresh, leaving room for both bearish and bullish arguments. Key resistance levels include $4,066-4,073 and $4,100, with $4,200 serving as invalidation for the bearish theme. For bullish strategies, reclaiming $4,000 could set the stage for a bounce towards prior resistance around $4,030, with a hold above $3,975 being critical.