Gold price (XAU/USD) declined by 0.61% to near $4,350 during the European trading session on Monday, pressured by a broadly firm US Dollar and solid expectations that the Federal Reserve will hike interest rates again this year [1]. The US Dollar Index (DXY) rose 0.1% to around 100.30, approaching its 50-day high of 100.56 set on Friday, making gold a less attractive investment due to its non-yielding nature [1].
Last week, the Federal Reserve raised interest rates by 25 basis points to a range of 3.75%-4.00% and signaled at least one more hike this year through its dot plot [1]. Economists at NBC Economics and Strategy noted that the updated dot plot indicates 'relatively broad support for more restrictive monetary policy for a significant period of time,' with the Fed not expecting a return to the 3.5%-3.75% range until the end of 2029, reinforcing a higher-for-longer policy stance [1]. This outlook is seen as negative for gold, which typically underperforms in a rising rate environment [1].
Technically, XAU/USD is trading at $4,349.73 with a bearish near-term bias, facing selling pressure above the 20-day exponential moving average (EMA) at approximately $4,366.80 [1]. The Relative Strength Index (RSI) is around 49, indicating slightly negative momentum, and the price remains capped below the short-term trend gauge [1]. Initial resistance is at the 20-day EMA, and a sustained break above this level could open the way for a recovery towards $4,500, while support lies near the July high at $4,200 [1].
No analyst opinions or forward-looking statements beyond the Fed's policy outlook and technical analysis are provided in the source [1].
CONCLUSION
Gold prices are under pressure due to a strong US Dollar and expectations of further Federal Reserve rate hikes, with technical indicators suggesting a bearish near-term outlook. Unless gold breaks above the 20-day EMA, further downside towards $4,200 is possible. The market remains cautious as higher US interest rates continue to weigh on non-yielding assets like gold.