XAU/USD Retreats Below $4,100 as Markets Reprice Hawkish Fed Outlook

Summary:

Summary: Gold remains under pressure as a stronger US Dollar and persistent expectations for another Federal Reserve rate hike offset safe-haven demand from escalating Middle East tensions. Repeated failures above $4,100 continue to favor a cautious near-term outlook for bullion.

Sell XAUUSD

End Time

CLOSED

4050.00

ENTRY

3960.00

TGT

4125.00

4072.76 +29.90 +0.74%

453

Points

Profit

3960.00

TGT

4045.47

CLOSING

4050.00

ENTRY

4125.00

Gold prices edged lower on Friday, with XAU/USD slipping toward the $4,060 level during the European session as renewed strength in the US Dollar and lingering expectations of another Federal Reserve rate hike weighed on the precious metal. The pullback follows repeated failures to sustain gains above the $4,100 resistance zone, leaving bullion vulnerable to further downside pressure despite ongoing geopolitical tensions in the Middle East.

The US Dollar regained momentum after Thursday's decline, supported by expectations that elevated energy prices could keep inflation pressures alive and force the Fed to maintain a hawkish stance. Although recent US data pointed to moderating economic growth and easing inflation, investors remain cautious that volatile oil prices could quickly reverse that trend.

Second-quarter US GDP expanded at an annualized 1.5%, slowing from 2.1% previously, while the headline Personal Consumption Expenditures (PCE) Price Index fell 0.1% in June, marking its first monthly decline since 2020. Annual headline inflation eased to 3.7%, while the Fed's preferred core PCE measure slowed to 3.3%, reinforcing expectations that inflation had begun to cool.

However, renewed military operations between the United States and Iran have kept crude oil prices elevated, reviving concerns that energy costs could fuel another wave of inflation. The latest escalation followed a fresh round of US strikes on Iranian targets, while Tehran rejected proposals for shared control of the Strait of Hormuz. At the same time, Saudi Arabia continues to build an international coalition to protect key shipping routes from attacks by Iran-backed Houthi forces, keeping geopolitical risks firmly in focus.

Despite softer inflation data, markets continue to expect tighter monetary policy. According to the CME FedWatch Tool, traders still see a strong probability of at least one additional Fed rate hike before year-end. Higher interest rates and elevated Treasury yields continue to support the Greenback, reducing the appeal of non-yielding assets such as gold.

Investors now turn their attention to the University of Michigan Consumer Sentiment and Inflation Expectations data for fresh clues on the US economic outlook and the Federal Reserve's next policy move. With gold still trapped below the key $4,100 resistance level, traders remain cautious as they await a stronger catalyst for the next major directional move.

Technical Analysis

Gold continues to trade within a well-defined range-bound structure, with price once again rejecting the $4,120–$4,135 resistance zone. After failing to establish a sustained move above this ceiling, sellers have regained control, shifting the short-term bias back to the downside.

The recent rejection has brought XAU/USD back toward the $4,050 pivot area, which is acting as immediate support. A decisive break below this level would likely accelerate selling pressure and expose the $3,960–$3,980 demand zone, where buyers previously stepped in to halt declines. As long as gold remains below the upper resistance band, rallies are likely to attract fresh selling interest.

Although the broader market remains trapped within its multi-week consolidation, price action currently favors the bears following another lower high beneath resistance. Momentum has also started to soften, suggesting that upside attempts are losing strength while downside risks continue to build.

If buyers manage to reclaim and close above $4,120, the bearish outlook would weaken and shift focus back toward the upper end of the range. Until then, the technical picture continues to favor a move toward the lower support zone.

TRADE RECOMMENDATION

SELL GOLD

ENTRY PRICE: 4,050.00

STOP LOSS: 4,125.00

TAKE PROFIT: 3,960.00

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

2813

Win Rate

63.52%

P/L Ratio

0.74

Focus on

XAUUSD, EURUSD, GBPUSD

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