Free Forex Signals

Gold drops to three-day low, eyes $4,300 as hawkish Fed and Iran risks underpin USD

September 22, 2026

Written by:

Gold struggles to capitalize on an intraday uptick as the Fed’s hawkish stance caps the upside.
US bond yields decline further amid easing inflation fears and keep the USD on the defensive.
Traders await developments surrounding the Middle East crisis before placing directional bets.

Gold (XAU/USD) turns lower for the second consecutive day following a modest intraday uptick, dropping to the $4,315 region, or a three-day low heading into the European session on Tuesday. The US Federal Reserve’s (Fed) hawkish outlook is seen as a key factor driving flows away from the non-yielding yellow metal.

In fact, the Fed’s updated Summary of Economic Projections showed that officials expect at least one more rate hike this year. Furthermore, Boston Fed President Susan Collins and St. Louis Fed President Alberto Musalem explicitly backed the case for further policy tightening as inflation risks remain elevated due to a commodity price shock. Meanwhile, the recent pullback in oil prices helped cool immediate inflation fears and drag US bond yields away from multi-year highs. This keeps the US Dollar (USD) capped below its highest level since late July, touched on Friday, and could act as a tailwind for the Gold price.

Meanwhile, Iran’s Islamic Revolutionary Guard Corps (IRGC) warned on Monday that it would change the geography of the war if the US escalates the conflict. The US, on the other hand, is stepping up economic pressure on Iran, warning that Iranian airlines could effectively be shut out of international aviation from September 23. Adding to this, intensifying fighting between the Iran-backed Houthi group in Yemen and Saudi Arabia keeps the geopolitical risk premium in play, which triggers a modest bounce in crude oil prices and favors USD bulls. This, in turn, is seen as another factor holding traders from placing bullish bets on gold.

The downside for the commodity, however, remains limited as traders await further developments surrounding the Middle East crisis and their implications for inflation. This would influence interest rate expectations and drive the bullion. Apart from this, the focus will on a crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on Thursday. Furthermore, speeches from influential FOMC members will drive the USD and provide some impetus to gold. Nevertheless, the fundamental backdrop warrants caution before positioning for an extension of the bounce from an over one-month low.

XAU/USD daily chart

Technical Analysis

The XAU/USD pair holds a mildly bearish near-term bias below the 100-day Exponential Moving Average (EMA) at $4,377. The 38.2% Fibonacci retracement level of the June-August upswing, at $4,410, caps the upside, while the 50.0% retracement at $4,321 lends some support to the precious metal. Momentum indicators are mixed, with the Relative Strength Index (14) hovering near a neutral 48.81 and the Moving Average Convergence Divergence (MACD) below zero and showing a contracting negative profile. This, in turn, hints at fading downside pressure but not yet signaling a sustained recovery.

Meanwhile, a break below the 50.0% retracement level would expose the 61.8% Fibo. level at $4,232 and deeper structural levels at $4,105 and $3,943 if selling extends. On the topside, initial resistance emerges at the 100-day EMA at $4,377 ahead of the 38.2% Fibo. retracement at $4,410, with further barriers seen at $4,521 and the cycle high anchor near $4,699. Only a clear daily close above this EMA-Fibonacci cluster would ease the current bearish tone.