Gold struggles near $4,350 as hawkish Fed outlook supports the Greenback

Gold starts the week on a bearish note as hawkish Federal Reserve expectations support the US Dollar.
Traders await US PMI data and speeches from several Fed officials this week.
XAU/USD holds a neutral outlook on the 4-hour chart as the RSI and MACD signal weak momentum.

Gold (XAU/USD) remains on the defensive on Monday, pausing a two-day winning streak as expectations of additional Federal Reserve (Fed) rate hikes and a firmer US Dollar (USD) limit the upside. At the time of writing, XAU/USD trades around $4,350 during American trading hours after touching an intraday low of $4,322.

The metal lacks strong follow-through selling as falling Oil prices keep US Treasury yields below last week’s multi-year highs. West Texas Intermediate (WTI) Oil trades around $92, its lowest level in more than a week, and is on track to fall for a fourth straight day.

Oil prices are under pressure amid signs of diplomatic efforts surrounding the war in the Middle East and improving energy flows from Saudi Arabia.

US President Donald Trump said he would “probably” be open to meeting Iranian President Masoud Pezeshkian on the sidelines of the United Nations General Assembly this week. Trump could also hold talks with other Persian Gulf leaders.

Iranian security chief Mohsen Rezaei said Tehran has sent its conditions to the United States through international mediators. However, he also warned that Iran would respond strongly if the US launches another attack. Meanwhile, Iran-backed Houthis and Saudi forces remain engaged in fighting.

For Gold, US interest-rate expectations, the US Dollar, bond yields, crude Oil prices and geopolitical developments remain the main drivers of price action. Energy prices are still well above pre-war levels and continue to add to inflationary pressure.

The energy shock has pushed major central banks towards tighter monetary policy, with the Fed raising interest rates by 25 basis points (bps) last week. Higher borrowing costs usually weigh on non-yielding assets such as Gold by making interest-bearing investments more attractive.

Chicago Fed President Austan Goolsbee said on Monday he is “optimistic that the Fed could get back on a path to 2% as long as there is no more evidence of demand overheating,” adding that he would have no problem with interest rates moving lower if there is “convincing evidence inflation is heading back to 2%.”

Traders are anticipating additional Fed rate hikes and are already pricing in a meaningful chance of another increase in October. The updated dot plot also points to at least one more rate hike this year. The prospect of tighter policy supports the US Dollar and keeps Treasury yields elevated, creating a difficult backdrop for Gold.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 100.40, below the seven-week high of 100.56 touched on Friday.

Looking ahead, the US economic calendar is relatively light this week. The main releases are preliminary S&P Global Purchasing Managers’ Index (PMI) data and the University of Michigan (UoM) Consumer Sentiment survey for September. Markets will also watch a busy schedule of Fed speakers for fresh clues about the future policy path.

Technical Analysis: XAU/USD remains range-bound near Bollinger middle band

On the four-hour chart, XAU/USD hovers just above the 20-period Bollinger Simple Moving Average at roughly $4,347, leaving the near-term bias neutral as price consolidates between nearby band support and overhead resistance. The upper Bollinger band around $4,412 caps the topside for now, suggesting upside attempts remain constrained while momentum normalizes, with the Relative Strength Index near 51 and the Moving Average Convergence Divergence (MACD) flat around the zero line hinting at a loss of directional conviction.

On the downside, initial support emerges at the mid-Bollinger band near $4,347, ahead of the lower band around $4,282 and a more substantial floor at $4,200. On the topside, immediate resistance is seen at the upper Bollinger band near $4,412, followed by a horizontal barrier at $4,450 and then $4,500, where a break higher would be needed to reassert a stronger bullish continuation on the four-hour timeframe.