Gold Holds Firm Despite Hawkish Fed, But Bears Gain Ground

Gold prices have been under pressure recently due to surging Treasury yields and an increasingly hawkish Federal Reserve. However, despite this unfavorable macro backdrop, gold has managed to avoid a breakdown, with sellers unable to take out the FOMC swing low at $4235.

The fact that gold hasn't broken down more aggressively over the past two weeks could be seen as a positive sign for bulls, who are holding onto the motive for reserves to flow into assets like gold and Bitcoin. This long-term bullish argument is supported by the metal's inability to break down further despite the hawkish Fed.

Historically, weakness in gold has only gone so far before buyers step in, as seen in June when Kevin Warsh shocked markets with his hawkish views. The 2025-like action in gold has been evasive since then, but buyers have continued to support the lows, illustrated by underside wicks on the weekly chart.

However, the lower-highs in gold indicate increasing aggression from bears, and unless bulls can change the tone soon, bearish pressure sets up for a downside break. This could lead to a test of a deeper support level at $4k, but it's worth noting that this wouldn't necessarily spell doom and gloom on a long-term basis.

The next key area of resistance is in the $4100 zone, which had set highs just before the falling wedge breakout. Breaking above this level could open up the door for a re-test of the prior week high at $4400, followed by the larger test of the early-September high at $4500.