FX.co ★ Sud | XAU/USD, GOLD

Gold prices (XAU/USD) fell to around $4,365 per ounce in early Asian trading on Tuesday, ending a two-day winning streak. Persistent concerns about monetary tightening by the Federal Reserve weighed on the non-yielding precious metal. This decline followed the Fed's historic decision last week to raise interest rates by 0.25 percentage points, bringing the benchmark federal funds rate range to 3.75%-4.0%. Market expectations quickly adjusted to the Fed's hawkish stance. Data from the CME FedWatch tool indicates that traders now anticipate a 90.3% probability of another rate hike by December. This shift in interest rate expectations has pushed up borrowing costs and propelled the dollar index to multi-week highs, putting significant downward pressure on gold prices. Jim Wyckoff, senior market analyst at the U.S. Gold Exchange, echoed this sentiment, noting that ongoing concerns about monetary tightening have bolstered sellers' confidence. Note that a stronger dollar and higher yields negatively impact precious metal prices. Recent comments from several top Federal Reserve officials have reinforced the central bank’s hawkish stance and increased expectations of a prolonged period of rising interest rates. St. Louis Fed President Alberto Musallam stated on Monday that further rate hikes may be necessary to sustainably return inflation to the Fed’s 2.0% target. He warned that without further monetary policy restraint, price pressures could remain uncomfortably high. Musallam’s comments received a high rating of 8/10 on the FXS Speechtracker, indicating a clear inclination toward proactive tightening measures to address the broad shock to commodity prices and the persistent core inflation rate near 3%. This sentiment is also reflected in the FXS Fed Investor Confidence Index, which remained in hawkish territory at 149.96, reinforcing a favorable policy environment for the dollar and limiting large inflows into zero-yielding assets. Despite this, external factors have partially mitigated gold's decline, including initial improvements in the Middle East diplomatic situation—with Iranian President Masoud Pezeshkian reportedly scheduled to address the UN General Assembly in New York seeking a diplomatic solution—which has helped alleviate concerns about a catastrophic energy supply shock. ING strategists emphasize that while monetary policy tightening remains a significant headwind for gold in the short term, as investors digest the impact of the Federal Reserve's first interest rate adjustment since 2023, underlying structural support remains strong. ING notes that continued institutional demand provides important safety nets, pointing out that global ETF holdings are currently at a six-month high, and that continued reserve accumulation by central banks will help limit the sharp decline in gold prices. From a technical analysis perspective, the price of gold against the US dollar (XAU/USD) remains neutral in the short term, fluctuating around the daily opening pivot point of $4363.65, reflecting a broader consolidation phase. The current price is slightly below the 20-day simple moving average (SMA) of the Bollinger Bands, which somewhat limits its short-term upside potential. However, the price remains above the key 100-day SMA at $4320, maintaining the strength of the medium-term uptrend. The 14-day Relative Strength Index (RSI) is hovering around the neutral level of 50, confirming the absence of a clear dominant trend. On the upside, there is immediate technical resistance near the middle of the Bollinger Bands (around $4405), while the upper Bollinger Band (around $4615) represents stronger resistance. On the downside, the 100-day moving average (around $4,320) provides immediate support, while the lower Bollinger Band (around $4,200) offers deeper structural support. Buyers are expected to support the current bullish pattern in this area amid increased volatility.