Gold Price Forecast: XAU/USD extends reversal below $4.400 amid Fed hawkish repricing
Gold (XAU/USD) resumed its decline on Tuesday, following a flat performance on Monday, reaching fresh two-week lows at $4,375 so far, posting a nearly 7% decline from last week’s peak, near $4,700.
The XAU/USD exchange rate dropped below $4,400 on Tuesday, marking a 7% decline from last week's peak near $4,700 after Federal Reserve Chairman Kevin Warsh's hawkish remarks at the Jackson Hole summit. Analysts at Brown Brothers Harriman noted that the USD has recovered most of its losses, with a 67% probability of a 25 basis points increase in Fed funds by September 16 and a 60 basis point tightening over the next year.
August CPI on September 11 will be the decisive test for Fed rate expectations and the USD's recovery. Momentum indicators in the daily chart entered bearish territory, with the RSI testing below 50 and the MACD slipping below zero. Support is seen at the mid-August lows between $4,310 and $4,330, while resistance lies at the $4,450 area, now turned into resistance.
Central banks, particularly those in emerging economies, continue to add gold to their reserves, viewing it as a safe-haven asset during turbulent times.
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