Gold dives to $4,700, fresh low since February amid Fed's hawkish outlook

Gold attracts heavy selling following a modest intraday uptick and dives to a fresh one-month low.
The Fed’s hawkish outlook acts as a tailwind for the USD and undermines the non-yielding bullion.
Geopolitical uncertainties may support the safe-haven XAU/USD pair and help limit further losses.

Haresh Menghani FXStreet

Gold (XAU/USD) dives to a fresh low since February 6 during the first half of the European session on Thursday, though it finds some support near the $4,700 round figure. The US Dollar (USD) preserves the previous day's strong gains fueled by the US Federal Reserve's (Fed) hawkish outlook, which, in turn, is seen as a key factor undermining the non-yielding yellow metal. However, heightened geopolitical uncertainties could offer some support to the safe-haven bullion and help limit further losses.

Data published by the US Labor Department on Wednesday showed that the headline Producer Price Index (PPI) rose 0.7% in February, following a 0.5% increase in the previous month. Adding to this, the yearly rate jumped to 3.4%, marking the largest 12-month advance since February 2025. Moreover, the US central bank raised the year-end inflation outlook (PCE), citing risks from higher energy prices due to the Iran war. The Fed also upgraded its 2026 growth projection and projected only one rate reduction this year, and one in 2027. This, in turn, favors the USD bulls and should keep a lid on the attempted recovery in the Gold price.

Meanwhile, energy infrastructure in Persian Gulf countries came under attack today following Israeli strikes on Iran’s South Pars natural gas field – the world’s largest. In response, US President Donald Trump issued a stark warning of potential large-scale retaliation tied to energy infrastructure. Adding to this, the Trump administration is reportedly exploring options to expand its military campaign against Iran and is considering deploying thousands of US troops to reinforce its operation in West Asia. This marks a significant escalation in the conflict and continues to weigh on investors' sentiment, which could support the traditional safe-haven Gold.

Traders might also opt to wait for more policy updates from the Swiss National Bank (SNB), the Bank of England (BoE), and the European Central Bank (ECB), which should infuse volatility in the financial markets. Apart from this, the US economic data – the usual Weekly Initial Jobless Claims and the Philly Fed Manufacturing Index – might provide some impetus to the Gold price. Nevertheless, the fundamental backdrop warrants some caution before confirming that the XAU/USD pair has formed a near-term bottom and is positioning for any meaningful recovery.

(This story was corrected on March 19 at 09:02 to say that the previous month's headline PPI reading was 0.5%, not 0.3%.)

XAU/USD 4-hour chart

Gold seems vulnerable below 61.8% Fibo. support breakpoint near $4,800

Last Friday's breakdown below the $5,040-$5,035 confluence – comprising the 200-period Exponential Moving Average (EMA) on the 4-hour chart and the 38.2% Fibonacci retracement level of the February-March move higher – was seen as a key trigger for the XAU/USD bears. Moreover, the Moving Average Convergence Divergence (MACD) histogram has turned negative again with the line slipping below the signal line under the zero mark, suggesting renewed downside momentum after a brief pause.

Meanwhile, the Relative Strength Index (RSI) at 27.86 stays below 30, showing oversold conditions, yet the persistent weakness favors selling pressure over a meaningful rebound for now. Hence, any further move up is likely to confront resistance at the $4,919.61 area, where the 50.0% retracement level aligns as the first cap on recovery attempts. This is followed by the 38.2% Fibo. retracement at $5,037.25 near the 200-period EMA, reinforcing a stronger barrier if prices bounce.

On the downside, the recent trough around $4,843 becomes initial support, ahead of the $4,801.97 level at the 61.8% retracement, which would be the next bearish objective if sellers extend their control. A clear break below $4,801.97 would expose the broader $4,634.48 support at the 78.6% retracement, where oversold readings could encourage profit-taking on short positions.

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

Interest rates FAQs

What are interest rates?

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

How do interest rates impact currencies?

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

How do interest rates influence the price of Gold?

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

What is the Fed Funds rate?

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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