Gold (XAU/USD) experienced selling pressure after a modest uptick during the Asian session on Tuesday, sliding below $4,350, although the downside appears limited for now [1]. The US Federal Reserve's hawkish stance, as reflected in its updated Summary of Economic Projections, indicates officials expect at least one more rate hike this year. Boston Fed President Susan Collins and St. Louis Fed President Alberto Musalem have both explicitly supported further policy tightening, citing elevated inflation risks stemming from a commodity price shock [1].
Recent declines in oil prices have helped ease immediate inflation concerns and pulled US bond yields away from multi-year highs, which has kept the US Dollar capped below its highest level since late July. This dynamic has provided some support for gold prices, but not enough to reverse the prevailing bearish sentiment [1].
Geopolitical tensions remain elevated, with Iran's Islamic Revolutionary Guard Corps (IRGC) warning that it would change the geography of the war if the US escalates the conflict. The US is increasing economic pressure on Iran, threatening to shut Iranian airlines out of international aviation from September 23. Additionally, intensifying fighting between the Iran-backed Houthi group in Yemen and Saudi Arabia is sustaining the geopolitical risk premium, which supports crude oil prices and favors USD bulls, further restraining aggressive buying in gold [1].
Market participants are cautious ahead of a crucial meeting between US President Donald Trump and Chinese President Xi Jinping on Thursday, as well as potential volatility from headlines at the 81st United Nations General Assembly. Upcoming speeches from influential FOMC members are also expected to impact USD demand and gold prices. Technically, XAU/USD holds a mildly bearish bias below the 100-day EMA at $4,377, with resistance at the 38.2% Fibonacci retracement ($4,410) and support at the 50.0% retracement ($4,321). Momentum indicators are mixed, suggesting fading downside pressure but not signaling a sustained recovery [1].
CONCLUSION
Gold remains under pressure due to the Federal Reserve's hawkish outlook and ongoing geopolitical tensions, with technical indicators pointing to limited downside but no clear recovery. Market participants are likely to remain cautious ahead of key geopolitical events and FOMC speeches, which could drive further volatility in gold prices.