Gold (XAU/USD) declined for the second consecutive day on Tuesday, trading below $4,320 during the European session after being rejected at the $4,400 area. This drop extends the metal's recent weakness, as last week's recovery attempt was capped at $4,400. The decline in gold prices coincides with the US Dollar Index (DXY) consolidating above the key 100.00 level, supported by rising expectations of further Federal Reserve interest rate hikes. Boston Fed President Susan Collins and St. Louis Fed President Alberto Musalem both endorsed the possibility of additional monetary tightening by the US central bank on Tuesday, which provided further support for the US dollar and weighed on gold prices [1].
Technical analysis indicates that XAU/USD is hovering above the neckline of a bearish Head & Shoulders pattern. The Relative Strength Index (14) remains below the 50 midline, and the MACD indicator is in negative territory, suggesting that any rallies in gold are likely to be capped. Key resistance is identified at the $4,230 area, where the August 7 and September 16 lows meet the H&S neckline. A confirmed break below this level could bring the $4,000 psychological area into focus. Conversely, bulls would need to break above the intra-week highs at $4,399 and the September 3 high at $4,510 to negate the bearish structure and shift attention toward August's peak near $4,700 [1].
The US Dollar was the strongest against the Australian Dollar among major currencies, as shown in the percentage change table for the day. The ongoing strength in the US Dollar, driven by expectations of further Fed rate hikes, continues to exert downward pressure on gold prices [1].
CONCLUSION
Gold prices are under pressure, trading below $4,320 after failing to break above $4,400, as the US Dollar strengthens on renewed Fed rate hike expectations. Technical indicators suggest a bearish outlook unless key resistance levels are reclaimed. The market is closely watching for further signals from the Federal Reserve and price action around the $4,230 and $4,000 levels.