Gold edges lower below $4,450 as Middle East tensions add inflation pressure

Gold price (XAU/USD) declines to near $4,445 during the early Asian trading hours on Tuesday. The precious metal loses momentum as ongoing tensions in the Middle East stoked concerns about inflationary pressures that could make the Federal Reserve hike interest rates. 

US President Donald Trump on Monday threatened to forcefully strike Iran after Washington and Tehran exchanged fire for the first time in a month. Meanwhile, Iran's Revolutionary Guard Corps (IRGC) said it targeted US military bases in the two Middle Eastern countries in response to the first US strikes on Iran in weeks. The US military announced an attack Sunday on what it said were Iranian rocket launchers on Larak Island, in the Strait of Hormuz.

Traders assess rising bets of a Fed rate hike following hawkish comments from Chair Kevin Warsh as a surge in oil prices further added to inflation concerns. At the Fed’s annual Jackson Hole symposium, Warsh reiterated the central bank’s commitment to its inflation target and indicated policymakers were not yet confident price pressures were easing sufficiently.

“The move toward a more hawkish stance was surprising to many investors, so some short-term headwinds on gold should continue,” said GAMA Asset Management Global Macro Portfolio Manager Rajeev De Mello.

Traders are now pricing in more than 65.4% odds of a rate hike at the Fed’s September meeting, up from around 39.9% before the speech, according to the CME FedWatch tool.

Gold eases as markets reassess Fed path after Jackson Hole

According to TD Securities, Gold “settles lower near $4,600/oz as markets weigh Fed monetary policy path, following Chair Warsh's Jackson Hole remarks,” with the move reflecting a reassessment of the rate outlook in the wake of the latest Fed communication.

Warsh flags unfinished inflation fight, keeps Dollar bulls alert

Fed Chair Warsh delivered a notably more hawkish-leaning tone, with the FXS Speechtracker score at 7.4 versus a 6.5 historical average, underscoring heightened concern on price stability despite solid growth and stable labor markets. The insistence that the Fed must be confident underlying inflation is moving to objective or “we have work to do,” combined with comments that financial conditions are not restrictive and credit markets show few signs of policy restraint, signals openness to further tightening if inflation trends fail to improve meaningfully. Warsh’s emphasis that the 2% PCE target is “firm and fixed” and that the predominant focus should be on prices supports a Dollar-positive bias, even as near-term patience from the July meeting is acknowledged.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated 129.70, confirming that the broader policy narrative remains firmly in hawkish territory according to the FXS Speechtracker. The lack of index movement suggests the speech reinforced, rather than shifted, existing expectations that the Fed will prioritize delivering price stability, a backdrop that should continue to underpin the Dollar against lower-yielding peers.

Technical Analysis: Gold price

In the daily chart, XAU/USD holds a constructive near-term bias as price remains above the 100-day Moving Average (MA) at $4,370.48 and the Bollinger Bands’ 20-day simple moving average (SMA) center line at $4,430.23, suggesting the broader uptrend is still supported. The Relative Strength Index (RSI) at 54 keeps momentum in neutral-to-positive territory, hinting that bullish pressure persists but without overstretched conditions.

On the topside, the Bollinger Bands’ upper boundary near $4,723.68 acts as the next significant resistance, where buyers could start to hesitate. On the downside, immediate support is located around the $4,430 area at the 20-day SMA, followed by the 100-day MA at $4,370.48, while a deeper pullback would likely be cushioned by the lower Bollinger band near $4,136.78.

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