XAU/USD Falls on Stronger Fed Rate Expectations

Traders' Opinions

Summary:

Gold fell sharply on Monday as renewed fighting between the US and Iran lifted oil prices and reinforced expectations that the Federal Reserve will keep interest rates higher for longer.

SELL XAUUSD

Close Time

CLOSED

4063.00

Entry Price

3950.00

4170.00

3995.71 -124.66 -3.03%

630.7

Pips

Profit

3950.00

3999.93

Exit Price

4063.00

Entry Price

4170.00

Gold started the week under renewed selling pressure, with XAU/USD falling toward the $4,060 area after heightened tensions between the United States and Iran reignited inflation concerns and strengthened expectations that the Federal Reserve will tighten monetary policy further this year.

The weekend saw both countries exchange missile and drone strikes, while Iran claimed it had once again closed the Strait of Hormuz, a key global energy corridor. Although Washington insists shipping remains uninterrupted under US naval protection, the renewed conflict pushed crude oil prices sharply higher and revived concerns over global energy supply.

WTI crude climbed above $73 per barrel, briefly approaching $75, while the US Dollar also advanced before surrendering part of its gains. Even so, the combination of elevated oil prices and persistent inflation concerns continued to weigh on bullion.

In my view, the market is increasingly focused on the inflationary consequences of higher energy prices rather than Gold's traditional safe-haven appeal. If rising crude prices feed into broader consumer inflation, the Federal Reserve could be forced to maintain a restrictive policy stance for longer, reducing the appeal of non-yielding assets such as Gold.

Analysts at Brown Brothers Harriman (BBH) expect sticky inflation and a resilient US labor market to keep the Fed on a hawkish path, with markets now fully pricing in a 25-basis-point rate hike by year-end and nearly 50 basis points of additional tightening over the next twelve months.

Attention now shifts to Tuesday's US Consumer Price Index (CPI) report and Federal Reserve Chair Kevin Warsh's congressional testimony, both of which are expected to provide fresh clues on the direction of US monetary policy and could determine Gold's next major move.

Technical Analysis

Gold is struggling to regain traction on the 4-hour chart, with price hovering near $4,063 after another failure beneath the $4,100–$4,115 resistance band. Recent candles show repeated rejection from this zone, while successive recovery attempts have become shallower, pointing to weakening demand and a growing risk of another move lower.

The broader price sequence still favors sellers. Gold has been carving out lower highs since the early-July rebound stalled near $4,180, and the inability to reclaim $4,100 suggests that the latest bounce was corrective rather than the start of a durable reversal. The market is now compressing just above short-term support, which often precedes a fresh directional move.

The first area to watch on the downside sits around $4,035–$4,025. A break through that pocket would likely accelerate selling toward the stronger $3,960–$3,975 demand zone, where buyers previously stepped in during late June and early July. That region is the main downside objective marked on the chart. A close beneath $3,950 would be a more serious technical failure and could expose the $3,900 handle.

On the upside, bulls must first recover $4,100–$4,115 to relieve immediate pressure. Even then, gold would face another obstacle near $4,150–$4,180. Only a sustained move above that area would begin to challenge the bearish sequence and shift focus toward the larger resistance zone around $4,250–$4,265.

The present setup suggests that rallies are still being used to reduce long exposure rather than build fresh bullish positions. Since the chart does not show RSI or MACD, the assessment is based on price behavior, rejection zones, and the repeated failure to hold above resistance.

TRADE RECOMMENDATION

SELL GOLD

ENTRY PRICE: 4,063

STOP LOSS: 4,170

TAKE PROFIT : 3,950

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