Gold has now posted its third straight weekly decline, with spot XAUUSD settling around $4,155 after touching an overnight low of $4,119.78 . The market is in the throes of a brutal repricing following Federal Reserve Chair Kevin Warsh's first FOMC press conference—a debut that many in the trading community, myself included, found surprisingly hawkish. The dot plot shifted from zero members expecting a rate hike in March to nine out of eighteen projecting a hike before year-end . December rate hike odds on the Fed funds futures market surged from 60% to 85% virtually overnight . While some of this is typical post-meeting noise, the scale of the repricing has caught even seasoned gold bulls off guard.
The Dollar Factor and Technical Breakdown
The primary driver of this selloff is straightforward: a stronger US dollar and the evaporation of geopolitical risk premium. The ceasefire memorandum between the US and Iran, which took effect over the weekend, essentially removed a floor that had been propping up gold prices . When the geopolitical bid disappears at the same time the Fed is signaling tighter policy, gold loses both of its primary near-term catalysts.
On the technical front, the picture has turned decisively bearish. XAUUSD has been trading below its 200-day moving average since June 5th, a critical technical breach that suggests the medium-term uptrend is under significant threat . For context, the price is now down approximately 25.6% from the all-time high of $5,595 reached on January 29th this year . The weekly close below the $4,200 psychological handle confirms this weakness.
Key levels to watch in the coming days:
Institutional Shifts: Goldman Sachs and the "Tactical Caution"
Wall Street is adjusting its view. Goldman Sachs, one of the most persistently bullish voices on gold over the past two years, has cut its year-end target from $5,400 to $4,900 . Analysts Lina Thomas and Daan Struyven described their stance as "structurally constructive, but tactically cautious," a notable shift in tone . The bank explicitly warned that if the Fed actually follows through with a hike, gold could fall to $4,440 .
The Goldman revision is significant not just because of the price adjustment, but because of the rationale. They noted that with their economists pushing the last two Fed rate cuts to 2027, the flow of capital into gold ETFs will likely be lower than expected. "The market's concerns about central bank independence may also ease" now that Warsh is at the helm, further reducing the need for gold as a macro policy hedge . This is a crucial nuance—Goldman is saying that a credible Fed reduces the long-term tail risk that made gold so attractive in the first place.
My Take: The Bull Market Isn't Over, But It's Changing Shape
This is where I want to introduce a perspective that diverges somewhat from the mainstream "buy the dip" or "panic sell" narratives. I don't think this is the end of the gold bull market. The data shows central bank buying remains robust, with monthly purchases expected to hover around 50 tons . However, the nature of the bull market has shifted. We're moving from a "monetary debasement" or "geopolitical panic" bull run to an "inflation-adjustment" and "fiscal concern" bull run.
I've spent the weekend going through the detailed notes from the Merk Investments team, and I agree with founder Axel Merk's assessment that a hawkish Fed is paradoxically a "healthy reset" for gold . While hawkish policy initially pressures gold, it also reduces the high degree of uncertainty that plagued markets during the Powell era. This allows investors to shift their focus from short-term rate speculation to the "continuing deterioration of the US fiscal fundamentals"—a longer-term issue that gold is uniquely suited to hedge.
The proprietary angle I'd like to highlight is this: We need to stop treating "safe haven" and "rate hedge" as the same attribute for gold. Currently, the Fed is hiking to fight inflation that's partly driven by energy prices. But the Middle East peace framework suggests oil prices are likely to cool. If inflation peaks earlier than expected, the actual probability of a rate hike is far lower than the dot plot suggests . The market is currently pricing in the *fear* of a hike, not the reality. I'm not saying buy now—I'm saying understand that this disconnect between fear and reality will eventually manifest as a violent short squeeze. The market will eventually realize that Warsh's hawkishness is a headline-grabbing tactic, not necessarily a path to a tightening cycle that breaks the economy.
The Short-Term Trading Outlook
For traders, the immediate path of least resistance is still down. The momentum indicators (MACD red bars expanding, KDJ bearish crossover) all suggest selling pressure is dominant . My strategy is to sell rallies until I see a structural shift—specifically, a break above $4,230 on strong volume.
I'm not in the business of making definitive predictions, but I am watching the $4,000 level closely. A break below that has a high probability of triggering a further crash toward $3,700, while holding above it creates a massive double-bottom potential .
Reference:
*This article was originally published on FXEAR.com, original content, reproduction without authorization is prohibited.*