Gold's $4,600 Break: A Tactical Setup After the Fed Probe

The immediate spark for gold's record surge was a specific policy shock. On Monday, spot gold advanced 2% to hit over $4,600 an ounce for the first time. This move was directly triggered by an investigation into Federal Reserve Chair Jerome Powell. The probe, examining a $2.5 billion renovation of the Fed's headquarters and Powell's recent congressional testimony, introduced acute uncertainty about the central bank's leadership and future direction.

The rally was broad-based, signaling a systemic flight to safety. Silver and platinum also hit record highs, with silver trading near $91.60 an ounce and platinum climbing to $2,390. This widespread strength indicates the market was pricing in a broad "safe-haven" bid, driven by the confluence of geopolitical flashpoints and now, a direct threat to central bank independence.

The core policy risk is clear. Analysts note the probe adds a fresh layer of uncertainty, especially if it hastens a leadership change. The scenario that a new Fed Chair may be more dovish and inclined toward faster interest-rate cuts is traditionally supportive for gold. Lower rates reduce the opportunity cost of holding a non-yielding asset like gold. This dynamic has been amplified by recent U.S. economic data pointing to a cooling labor market, making the dovish shift more plausible.

The Mechanics: Dollar Pressure and Technical Battle

The immediate headwind for gold is clear: a resurgent U.S. dollar. After the initial Fed-probe rally, the Greenback regained strength in the back half of last week, putting direct pressure on the precious metal. This dollar rebound drove a pullback from the record highs, re-centering the battle around the $4,600 resistance level. The dynamic is straightforward-gold is priced in dollars, so a stronger dollar makes it more expensive for holders of other currencies, dampening demand.

This dollar pressure held firm even as some macro data softened. A softer core CPI print and stronger retail sales should, in a normal week, have supported the dollar and pressured gold. Yet risk-off sentiment remained entrenched, showing that geopolitical and policy uncertainty is currently overshadowing traditional economic signals. The market's focus remains on the stability of the Fed and global flashpoints, not on December inflation numbers.

The key technical level to watch is the $4,600 barrier. A decisive break above it could signal the start of a new leg higher, with analysts pointing to a potential target of $5,000/oz by the fourth quarter of 2026. However, a break below would signal a deeper correction, as the recent pullback demonstrates. The price action this week-a brief push to new highs, followed by a sharp dip on dollar strength, and a fast rebound-shows the market is in a state of flux. The $4,600 level is now the focal point for determining whether the bullish trend from the Fed probe is intact or facing a technical test.

The Setup: Near-Term Trading Levels and Catalysts

The market is now in a clear battle around the $4,600 level. After a volatile week that saw gold briefly reclaim record highs and then pull back on dollar strength, the price action has re-centered on this key resistance. The immediate risk/reward hinges on whether this level holds as a floor or breaks decisively. A sustained move above $4,600 would validate the bullish momentum from the Fed probe, potentially opening the path toward the $5,000/oz target by the fourth quarter of 2026. A break below, however, would signal a deeper correction and likely test the psychological support near $4,500.

The next major catalyst is the resolution of the investigation into Federal Reserve Chair Jerome Powell. This is the original policy shock that sparked the rally, and its outcome will dictate the near-term trajectory. If the probe leads to a leadership change and a perceived shift toward a more dovish Fed, it could reignite the rate-cut narrative that supports gold. For now, the uncertainty itself is a persistent headwind, keeping the market on edge.

On the demand side, central bank buying remains a powerful structural tailwind, with purchases averaging 585 tonnes per quarter. Yet even this strong demand may face a ceiling. HSBC warns that high prices could eventually dampen purchases, potentially pulling them below the 2022-2024 peaks. This suggests the current rally may be testing the limits of what is sustainable for official sector buying.

Finally, the relative value story between gold and silver is shifting. The gold-silver ratio has fallen to its lowest level since 2013, a sign that silver has been catching up after years of underperformance. Silver's 28% gain in 2026 appears to be a "catch-up" move rather than the start of a new, independent trend. This dynamic could limit silver's upside relative to gold in the near term, as the ratio seeks a more balanced level.