Gold struggles near multi‑week low as Fed hike bets and geopolitical risks boost USD
- Gold struggles to register any meaningful recovery and hangs near a multi-week low.
- Fed rate hike bets and inflation risk keep US bond yields elevated, supporting the USD.
- Geopolitical risks further underpin the safe-haven buck, capping gains for the bullion.
Gold (XAU/USD) drifts lower for the second straight day – also marking the third day of a negative move – and trades around the $4,265-$4,264 region, down 0.80% during the first half of the European session on Tuesday. The commodity remains within striking distance of an over one-month low, which it touched on Monday, as traders keenly await the crucial two-day FOMC policy meeting, starting later today.
The US Federal Reserve (Fed) is scheduled to announce its decision on Wednesday, and the latest US inflation figures, released last week, lifted bets for an imminent interest rate hike. The focus, however, will be on updated economic projections, including the so-called dot plot, and Fed Chair Kevin Warsh's comments during the post-meeting press conference. Investors will look for more cues about the Fed's future policy path, which will play a key role in influencing the US Dollar (USD) price dynamics and provide a fresh directional impetus to the non-yielding Gold.
Heading into the key central bank event, inflation risks stemming from higher energy prices underpin prospects for further Fed policy tightening. Adding to this, a surge in public and corporate borrowing contributed to an extended global bond selloff. This, in turn, lifts the yield on the benchmark 10-year US Treasury bond beyond the 5% threshold for the first time since 2023. Adding to this, persistent geopolitical uncertainties keep the safe-haven USD close to a nearly two-week high, touched on Monday, and continue to undermine demand for the Gold.
In the latest developments surrounding the Middle East crisis, Iran-backed Houthis in Yemen carried out a large-scale missile and drone attack on a Saudi air base in Khamis Mushait on Monday. Moreover, Iranian Supreme National Security Council Secretary Mohsen Rezaei rejected the prospect of immediate negotiations with the US, saying that Tehran will not return to talks until its conditions are met. This dampens hopes for a diplomatic solution to end the war, favoring USD bulls and suggesting that the path of least resistance for the Gold remains to the downside.
XAU/USD daily chart
Technical Analysis
The XAU/USD pair holds a slight neutral-to-capped tone as it sits just under the 50.0% retracement level of the June-August upswing, while still trading above the 50-day Simple Moving Average (SMA), suggesting consolidation rather than a clear trend. Moreover, the Relative Strength Index (RSI) hovers around 45, hinting at subdued momentum. However, the Moving Average Convergence Divergence (MACD) remains in negative territory with a depressed histogram, reinforcing the idea that rallies may struggle unless buyers reclaim overhead Fibonacci resistance.
Meanwhile, a move above the 50.0% retracement around $4,323 could face a strong barrier at the 38.2% Fibo. retracement near $4,412 and then the 23.6% level close to $4,522 if upside pressure builds. On the downside, immediate support is provided by the 50-day SMA at about $4,275, ahead of the 61.8% Fibo. retracement around $4,234. A convincing break below this zone would expose the deeper structural supports at the 78.6% retracement near $4,108 and the prior anchor area around $3,947.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.54% | 0.43% | 1.04% | 0.22% | 0.60% | 0.94% | 0.12% | |
| EUR | -0.54% | -0.13% | 0.48% | -0.32% | 0.06% | 0.40% | -0.43% | |
| GBP | -0.43% | 0.13% | 0.63% | -0.19% | 0.18% | 0.53% | -0.33% | |
| JPY | -1.04% | -0.48% | -0.63% | -0.81% | -0.48% | -0.16% | -0.96% | |
| CAD | -0.22% | 0.32% | 0.19% | 0.81% | 0.40% | 0.71% | -0.15% | |
| AUD | -0.60% | -0.06% | -0.18% | 0.48% | -0.40% | 0.34% | -0.50% | |
| NZD | -0.94% | -0.40% | -0.53% | 0.16% | -0.71% | -0.34% | -0.86% | |
| CHF | -0.12% | 0.43% | 0.33% | 0.96% | 0.15% | 0.50% | 0.86% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
