Gold nears $4,400: Is the bullish run over?

XAU/USD Current Price: $4,434

• The US Dollar resumed its advance amid escalating Middle East tensions.
• Federal Reserve Chair Kevin Warsh opened the door for a September rate hike.
• XAU/USD is bearish in the near term; the next downside hurdle is at $4,400.

Spot Gold trades in the $4,430 price zone on Monday, extending its slide at the start of the week as the US Dollar (USD) surges amid renewed tensions in the Middle East. Over the weekend, Iran and the United States (US) crossed fire around the Strait of Hormuz following a few weeks of tense calm.

Speculation that the conflict will escalate, and hence, result in higher energy prices driving inflation to uncomfortable levels, favored the Greenback, particularly after Federal Reserve (Fed) Chair Kevin Warsh's comments.

Fed Chair Warsh expressed concerns about elevated inflation while hinting that interest rates may need to rise further during his participation in the Jackson Hole Symposium on Friday. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job, our mandate and our charge to keep,” Warsh noted.

His words lifted the odds for a September rate hike, although some analysts speculate markets will have to wait until October to see it happening. The precious metal is then pressured, not only because of safety demand, but because the latter comes alongside mounting speculation the Fed will go for at least one interest rate hike before year-end.

XAU/USD Technical Outlook:

In such a scenario, it is hard to imagine the Gold price returning to record levels. However, it does not necessarily mean XAU/USD will lose its reserve-currency status. Indeed, the near-term view favors lower lows, but there will always be buyers to take their chances on dips. The $4,000 psychological threshold, despite being pierced recently, should remain a strong long-term line in the sand. The bullish run has paused, and additional near-term slides are likely. XAU/USD needs to recover the $4,700 level to recover its bullish poise.

In the four-hour chart, XAU/USD turned bearish, as it holds below both the 100-period Simple Moving Average (SMA) at $4,478.95 and the 20-period SMA at $4,536.03. The metal still rests well above the 200-period SMA near $4,283.50, which provides strong support. Finally, the 14-period Momentum indicator heads firmly south below its midline, while the Relative Strength Index (RSI) index hovers near 32, reflecting sellers hold the grip.

In the daily chart, XAU/USD holds above both the 20-day SMA at $4,429.64 and the 100-day SMA at $4,370.36, suggesting a constructive near-term bias despite the broader consolidation. However, the 200-day SMA at $4,528.89 remains a key overhead barrier, while a mid-range Relative Strength Index (RSI) near 53 hints at price nearing an inflection point.

On the topside, initial resistance is seen at the 100-period SMA around $4,478.95, followed by a stronger cap at the 20-period SMA near $4,536.03, where sellers could reassert control if any rebound extends. On the downside, immediate support is located at the 20-day SMA at $4,429.64, with a deeper cushion at the 100-day SMA around $4,370.36.

(The technical analysis of this story was written with the help of an AI tool. Know more.)