Gold Price Forecast: XAU/USD Avoids Breakdown as Yields Surged but Can it Continue?

Gold Talking Points:

• Gold was red on the week following the prior week gain, but notably sellers were unable to take out the FOMC swing low at $4235.
• The macro backdrop behind gold is about as unattractive as can be, with surging Treasury yields and an increasingly hawkish Fed.
• But, bigger picture, there’s still the motive for reserves to flow into areas like gold or Bitcoin and that can support the bullish argument from a long-term basis.

The silver lining, pun intended, is that gold hasn’t broken down more aggressively over the past two weeks.

Much like we saw back in June when Kevin Warsh first shocked markets by sounding far more hawkish than what anyone had expected, weakness in gold only went so far, as buyers showed up at the $4k handle and then held the lows for more than a month before ultimately tilting a breakout in August following Warsh’s next meeting atop the Fed.

Since then, however, the 2025-like action in gold has been evasive and the metal has sauntered lower, albeit tepidly.

From the weekly chart below you can see underside wicks illustrating buyers coming in to support the lows. But more problematic for shorter-term aims is the fact that sellers have been getting increasingly aggressive on bounces, thereby leading to a series of lower-highs.

Gold Weekly Price Chart

Chart prepared by James Stanley; data derived from Tradingview

Gold’s Lower-Highs

The lower-highs in gold show increasing aggression from bears, and unless bulls can change the tone in the next week or two, that bearish pressure sets up for a downside break and a test of a deeper support level.

This wouldn’t necessarily spell doom and gloom on a long-term basis, as that same $4k level lurks below. But, more ideally for the bullish case, buyers would step in a bit earlier, upon a test of prior resistance in the $4100 area that had set the highs back in late-July, just before the falling wedge breakout.

Gold Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

Gold Shorter-Term

From the four-hour we can see a clean zone of resistance taken from prior support, spanning the $4300-4320 zone on the chart. If bulls can break above that, and then force a test above the descending trendline, the door opens for a re-test of the prior week high at $4400, and then the larger test would be the early-September high at $4500.

It’s difficult to imagine that taking place without some form of softening in Treasury yields, but as the old saying goes, price leads and narrative follows. The fact that gold hasn’t broken down harder yet might be saying something important and we’ll find out whether that’s the case in the next couple of weeks.

Gold Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro