Gold Price Forecast: XAU/USD drops as hawkish Fed overshadows geopolitical risks

Gold (XAU/USD) has fallen sharply to its lowest level since early February, hovering around $4,680, pressured by a strong US Dollar (USD). This downside move is largely driven by the Federal Reserve’s (Fed) hawkish stance, which has reinforced expectations that interest rates will remain higher for longer. Recent inflation data, including a notable rise in the Producer Price Index (PPI), along with upgraded economic projections, support this outlook and reduce the likelihood of near-term rate cuts, weighing on non-yielding assets like Gold.

At the same time, rising geopolitical tensions in the Middle East are providing some support to the precious metal. The escalation involving Iran, Israel, and the United States (US), particularly attacks on key energy infrastructure, has increased demand for safe-haven assets. This uncertain environment is helping to limit Gold’s downside despite the pressure from US monetary policy.

From a technical perspective, the near-term bias, as displayed in the Gold's 4-hour chart below, is bearish as price extends its decline well below the 50-period and 100-period Simple Moving Averages (SMAs), which both trend higher above $5,050 and $5,120, highlighting a break away from the prior mean. The sustained rejection from the descending resistance trend line, last capping advances near $5,150, reinforces downside pressure and validates the shift from a corrective phase into a more directional sell-off. The Relative Strength Index (RSI) holds deeply oversold near 15, showing strong bearish momentum despite the risk of short-lived bounces.

Immediate resistance is seen at the horizontal barrier around $4,967.00, aligning close to the latest cluster of failed rebounds and marking the first level sellers would defend on any recovery. A break above that zone would expose the descending trend-line region near $5,050, where the 50-period SMA also looms as a stronger cap. On the downside, support is located at $4,655.28, with a clear break lower opening the way toward the next structural floor at $4,402.23. As long as XAU/USD holds below $4,967.00, rallies are expected to face selling interest rather than signal a sustained trend reversal.

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