Gold price forecast: XAU/USD holds around $4,400, but for how long?

XAU/USD Current Price: $4,398

• The Middle East conflict keeps financial markets in risk-averse mode.
• Investors bet the US Federal Reserve will hike interest rates in September.
• XAU/USD is trading range-bound, although the risk skews to the downside.

Gold attempt to regain its bullish momentum faltered around $4,700, with the precious metal now struggling to retain the $4,400 mark. The XAU/USD pair peaked in late August amid reduced speculation that the United States (US) Federal Reserve (Fed) would hike interest rates in September.

Risk-related trading has dominated financial markets for most of this year, with the main focus on Oil price movements and their impact on inflation. The conflict between the US and Iran, which keeps the main Middle East sea passage interrupted, is the main driver for energy prices.

US President Donald Trump launched an attack on Tehran on claims that the Islamic country continued to develop nuclear weapons. But of course, making the US the number one global Oil exporter was also behind the decision to initiate a war. What Trump did not calculate is what Iran’s stubbornness is costing the American people and the rest of the war.

Iran not only refused to capitulate, but also made its own demands and blocked the Strait of Hormuz. As a result, energy prices skyrocketed and exposed the fragile equilibrium between economic progress and inflation. This implies tighter monetary policy, which in turn slows economic growth.

President Trump for sure wants economic growth, but he also demands lower interest rates from the US central bank, something Chair Kevin Warsh & co cannot deliver with increasing price pressures. Instead, the Fed is leaning toward rate hikes.

The situation created a particular market response: In a risk-averse scenario, investors tend to rush into safety. Gold is the preferred refuge, usually followed by the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar (USD) is also considered a safe-haven asset, yet in tumultuous times, Gold demand tends to outpace that of the Greenback.

However, when potential US Fed rate hikes are added to the equation, the USD firms up vs the precious metal. That’s the case these days.

XAU/USD Technical Outlook:

As market participants bet on a Fed interest rate hike in September, XAU/USD comes under pressure.

From a technical point of view, the 4-hour chart shows XAU/USD as bearish, as the pair sits below the 20-period and 100-period moving averages while holding above the 200-period moving average. The 20-period SMA at $4,433.64 and the 100-period SMA at $4,491.14 act as overhead caps, suggesting rallies remain corrective within a broader consolidation. Momentum readings reinforce this subdued bias, with the 14-period Relative Strength Index (RSI) indicator heading marginally lower around 44 and the 14-period Momentum indicator developing below its midline, albeit directionless.

In the daily chart, XAU/USD sits between key moving averages, holding above the 100-day SMA at $4,346.86 while remaining capped by the 20-day SMA at $4,468.52 and the 200-day SMA at $4,536.74. The SMAs are neutral-to-bearish, reflecting increasing selling interest. The RSI indicator, in the meantime, pierces its midline, while the Momentum indicator gains downward traction within neutral levels, in line with lower lows ahead.

On the topside, immediate resistance emerges at the 20-period SMA near $4,433.64, with a break above this level exposing the denser barrier formed by the 100-period SMA around $4,491.14. On the downside, initial support comes from the market’s ability to defend the current area around $4,398, with the 100-day SMA at $4,346.86 as the next key floor; a clear drop below this level would expose deeper corrective risk within the broader range.

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