FX.co ★ Der | XAU/USD, GOLD

Gold (XAU/USD) faced strong selling pressure at the start of the new week, falling below $4,200 during Asian trading hours and hitting its lowest level since August 5, primarily due to weak fundamentals. Earlier this month, the Federal Reserve implemented a series of hawkish policy adjustments, including raising its benchmark interest rate to mid-September 2026. Ongoing inflation concerns, fueled by volatile oil prices, have kept US Treasury yields near multi-year highs, prompting institutions and individuals to withdraw investments from non-yielding gold. Given the Fed leadership's continued hints of further monetary tightening to address persistent price pressures, CME Group's FedWatch tool shows traders expecting the Fed to raise borrowing costs again as early as October, further bolstering the dollar's yield advantage. These fundamental pressures have resonated strongly with regional market strategists, such as OCBC Bank. They noted that strong domestic economic data, rising energy costs, and persistently high inflation expectations are driving US Treasury yields higher, creating a macroeconomic environment that supports a strong dollar but severely impacts interest rate-sensitive and arbitrage assets. Recent hawkish statements from Federal Reserve officials—including explicit warnings about the risks of rising inflation from New York Fed President Williams, Cleveland Fed President Hammark, and Philadelphia Fed President Paulson—have reinforced the market's belief that the Fed's battle against inflation is far from over. In addition to these unfavorable monetary policy factors, ongoing geopolitical tensions have also provided a direct advantage to the dollar as a safe haven over gold. Recent developments in the Middle East crisis have exacerbated this trend, with diplomatic maneuvering stalled in the Strait of Hormuz and fears of a potential military conflict growing. Furthermore, the ongoing attacks and retaliatory actions by Houthi rebels in Yemen have exacerbated concerns about global supply chains and energy markets, driving up oil prices and strengthening the dollar's dominance while weakening the competitiveness of precious metals. Market participants are closely monitoring a series of key economic data releases that will influence near-term market trends. These include upcoming speeches from several Federal Open Market Committee (FOMC) members, as well as a number of important macroeconomic data points, such as the US Personal Consumption Expenditures (PCE) price index released this week, the final reading of Q2 GDP, and the crucial non-farm payrolls report on Friday. From a technical analysis perspective, the daily chart for the gold/USD pair confirms that gold prices have fallen below the key 61.8% Fibonacci retracement level of the June-August rally. This downward trend is further supported by continued resistance near the 100-period exponential moving average. Momentum indicators strongly suggest that this corrective cycle is ongoing. The MACD indicator remains negative and trending downwards, while the 14-day Relative Strength Index (RSI) has fallen to around 38, indicating a period of significant selling pressure. If the current sell-off continues, gold prices are expected to find short-term support near the 78.6% Fibonacci retracement level at around $4,099, followed by stronger support from structural demand near previous lows around $3,939, where medium-term buying could emerge to mitigate the decline. Conversely, any technical or corrective rally will face strong initial resistance at the 61.8% Fibonacci retracement level around $4,226, followed by the 50.0% retracement level at $4,314, and then the 100-period descending exponential moving average at $4,352. Stronger supply barriers await at $4,403 and $4,513.