Gold Prices Plummet to Four-Week Low Below $4,300 as US Dollar Strengthens Amid Fed Rate Hikes and Geopolitical Tensions

Gold (XAU/USD) fell to a nearly four-week low during the Asian session on Wednesday and is poised to extend declines below $4,300 under a bearish fundamental outlook. Escalating tensions in the Middle East have driven crude oil prices to their highest levels since July 24, reigniting inflation concerns and bolstering expectations of further US Federal Reserve rate hikes. A continued US Dollar (USD) rally adds downward pressure on the precious metal.

Relations between the US and Iran intensified after a US strike on Iranian rocket launchers near Larak Island in the Strait of Hormuz on Sunday, marking the first such action since late July. Iran responded with counterattacks on US-linked targets, and Central Command (CENTCOM) reported additional strikes on Islamic Revolutionary Guard Corps (IRGC) facilities. In turn, Iran launched extensive ballistic missile and drone attacks on American interests in Bahrain, Kuwait, and Jordan on Wednesday. These tensions sustain elevated geopolitical risk premiums, supporting both oil prices and the safe-haven US Dollar.

Market participants are increasingly concerned that rising energy costs could stoke inflationary pressures, prompting central banks like the US Fed to maintain a hawkish stance. Fed Chair Kevin Warsh’s remarks at the Jackson Hole Symposium further amplify expectations of a September rate increase. Additionally, fiscal debt concerns triggered a sharp global bond market sell-off, pushing the 10-year US Treasury yield to its highest level since January 2025. This dynamic drives capital away from non-yielding gold, reinforcing bearish sentiment.

US 10-year yields seen grinding toward 5%

Societe Generale’s rates strategists caution that the recent sell-off leaves the US Treasury curve vulnerable to further upside in long-end yields, noting that “at this pace, US 10s are on track for 5%.” They characterize this as an ongoing bear steepening, as investors test how much additional term premium the market will demand amid sustained Fed tightening expectations.

Traders may await Friday’s closely watched US monthly employment report for directional cues on Fed policy, which could influence USD dynamics and offer fresh momentum for gold. In the interim, the bearish fundamental backdrop suggests downside risks remain dominant, with any rallies more likely viewed as opportunities to sell rather than sustain upward movement.

XAU/USD daily chart

Technical Analysis

Gold’s technical outlook remains negative, with an intraday break below the 50% retracement level of its July recovery potentially triggering further declines. The Moving Average Convergence Divergence (MACD) remains deeply negative and below the zero line, while the Relative Strength Index (RSI) hovers near 44, signaling weakening bullish momentum. A sustained drop below the 200-day Exponential Moving Average (EMA) at approximately $4,276 would strengthen the case for further losses. Support levels include the 61.8% Fibonacci retracement near $4,236, followed by the 78.6% level at $4,111 and the previous swing low around $3,952. Resistance is initially located at the 50% retracement near $4,324, with the 38.2% level at $4,412 and a stronger barrier at $4,521.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD0.12%0.09%0.03%0.12%0.04%0.81%0.15%EUR-0.12%-0.04%-0.07%0.00%-0.07%0.67%0.03%GBP-0.09%0.04%-0.04%0.04%-0.05%0.68%0.07%JPY-0.03%0.07%0.04%0.08%-0.00%0.73%0.10%CAD-0.12%-0.01%-0.04%-0.08%-0.08%0.66%0.03%AUD-0.04%0.07%0.05%0.00%0.08%0.74%0.13%NZD-0.81%-0.67%-0.68%-0.73%-0.66%-0.74%-0.61%CHF-0.15%-0.03%-0.07%-0.10%-0.03%-0.13%0.61%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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