Spot gold surges 1% to break above 4,330 as a hedge against the Federal Reserve's credibility, leaving bears stunned

[News Flash]

"Last Friday, CPI numbers were off the charts, rate hike probability soared above 90%, and the 10-year yield broke 5%—by the textbook, gold should have crashed. But it didn’t; instead, it climbed past $4,360 at one point. Zaye Capital Markets Chief Investment Officer Aslam pinpointed the essence in one sentence: ‘CPI is the trigger, but credibility is the real story.’"

What gold is trading on has changed. The traditional model hasn’t failed—rising inflation boosts the chance of a rate hike, and higher rates raise the opportunity cost of holding zero-yielding gold. But the issue now is that gold no longer simply hedges against inflation or interest rates alone; it’s about the market’s trust in whether the Federal Reserve can withstand political pressures or keep things under control. Trump is still publicly demanding rate cuts, while economic data is pushing markets to bet on a hike—the Fed is now at an unprecedented crossroads: investors are not just watching what it does, but judging whether it can maintain policy credibility under political pressure.

The bond market is the true "judge" tonight. On Monday, the 10-year US Treasury yield briefly surpassed 5%, and the 30-year topped 5.4%, the highest in 19 years. If, after a Federal Reserve hike, long-term yields stabilize and fall, it shows the market believes the Fed is in control—ironically, that’s negative for gold, as the uncertainty premium will fade. But if yields keep rising after a hike, the market is telling the Fed: one hike isn’t enough, investors are demanding higher risk compensation. In that case, gold could be facing both higher rates and continued buying—completely diverging from traditional logic.

What could put the most pressure on gold might actually be a "boring" meeting. If, after a rate hike, the bond market returns to order, inflation expectations stabilize, and the stock market digests everything calmly—without any turmoil—this is precisely gold's biggest risk. Because if the market regains confidence that the Fed can restore price stability, the policy uncertainty that gold hedges against drops.

[Latest Spot Gold Technical Analysis]

The US Dollar Index remains high, continuing to put pressure on the gold price. The Federal Reserve rate decision will be released in the early hours tonight. Reviewing the style of the last Waller speech, the key data that truly impacts the trend is actually the end-of-month PCE Price Index. However, with the rate decision announced first, coupled with last week’s surprisingly strong CPI, market expectations for a hike have now surged to 95%. Oil prices climbing further intensify inflation pressure, making a rate hike almost a foregone conclusion. But when the market is unanimously bearish and everyone thinks "rate hike = gold crash," it’s exactly when you need to be highly alert to risk variables—after persistent selling, is a “sell-the-news” reversal possible? If the Fed’s wording is dovish or hints at slower pace of future hikes, could that spark a short squeeze and trigger a rally? Opportunity and risk coexist—this is what makes decision night most exciting.

Turning back to the chart, yesterday’s gold price was range-bound at low levels; it rose slightly in the morning to test the previous day’s high near 4,317, then fell again. During the European session, it dropped as low as 4,261 before entering a narrow range; the daily chart ultimately closed as a bearish doji with a longer lower shadow, signaling a short-term need for a rebound and correction. The late session rebound to the 4,310 area forms short-term resistance, with support concentrated around 4,272–4,275. During the day session, the low buy strategy prevails, betting on a corrective rebound and a return to an upward trend as the market absorbs all bad news.

Support reference: 4,272–4,275; 4,258–4,260; 4,230–4,232

Resistance reference: 4,310–4,315; 4,335–4,338; 4,352–4,355