Gold (XAU/USD) posted marginal gains on Monday, trading around $4,450 but remained unable to recover from last week’s sharp decline, which saw the price fall over 4% and hit lows in the $4,400 area [1]. The primary driver behind this weakness was a surge in expectations for a Federal Reserve interest rate hike in September, following a hawkish speech by Fed Chairman Kevin Warsh at the Jackson Hole summit. Warsh emphasized the need for the central bank to focus on bringing inflation down to its 2% target, stating that the Fed still has 'work to do' [1]. As a result, investor bets on a September rate hike jumped to 61% from 36% the previous day, according to the CME’s FedWatch Tool [1].
Geopolitical tensions also played a significant role in market dynamics. Hostilities between the US and Iran resumed after a month-long truce, with the US military attacking the Iranian island of Larak, allegedly in response to missile preparations by the IRGC. Iran retaliated by targeting US airbases in Jordan and the United Arab Emirates. This escalation triggered a risk-off reaction, supporting the US Dollar and further pressuring gold prices [1].
From a technical perspective, XAU/USD’s drop below the 200-day simple moving average (SMA) at $4,528 on Friday was seen as a bearish signal, giving fresh confidence to sellers. Momentum indicators such as the RSI (54.36) and MACD suggest a neutral-to-negative outlook, with potential for further consolidation or downside movement. Key support levels are identified at $4,400, $4,310 (August 14 low), and $4,225 (August 6 low), while resistance is seen at the 200-day SMA ($4,528), the August 27 low ($4,565), and last week’s highs near $4,700 [1].
No forward-looking analyst opinions beyond the technical outlook and FedWatch data were provided in the article [1].
CONCLUSION
Gold remains under pressure as rising Fed rate hike expectations and renewed US-Iran tensions strengthen the US Dollar and weigh on bullion. Technical signals point to a bearish bias, with further downside possible if support levels fail to hold. Market sentiment is negative, and traders are closely watching upcoming Fed decisions and geopolitical developments.