Gold Price Forecast: XAU/USD hesitates below $4,300 as Fed hiking bets rise
- Gold treads water above $4,250 after failing to confirm above $4,370.
- A hawkish Fed stance boosted hopes of rate hikes this year and propelled the US Dollar across the board.
- XAU/USD faces a cluster of resistances above $4,300.
Gold (XAU/USD) shows marginal gains on Thursday, but remains close to weekly lows at $4,220. The precious metal’s recovery, fuelled by hopes of a peace deal in Iran, was crushed on Wednesday as a hawkishly leaning Federal Reserve statement boosted expectations of interest rate hikes later in the year.
The Fed left its benchmark rate unchanged, as widely expected, but the new chairman, Kevin Warsh, confirmed his determination to bring inflation down to the 2% target and released a shortened statement, without mentions of a dovish bias.
The bank observed an improvement in the economic activity and a stronger labour market, while the interest rate projections revealed that nine of the 19 board members expect at least one hike in 2026. Futures markets have boosted bets for a rate hike in October, which is keeping US Treasury yields and the US Dollar buoyed
Technical Analysis: Looking for direction below $4,30
XAU/USD trades at $4,269, keeping a broader bearish tone as it holds below a dense band of resistance. Momentum indicators in the daily chart are improving but remain in bearish territory. The Relative Strength Index (RSI) hovers just above 40 while the Moving Average Convergence Divergence (MACD) remains marginally negative, which together suggests that downside momentum has eased but not reversed.
Bulls have been halted at a previous support level near $4,370 (May 28 lows), which, together with the downtrend resistance from early March highs, immediately above $4,400, and the 200-day SMA at $4,464, are likely to pose a serious challenge.
On the downside, Wednesday's low, near $4,220, is likely to provide some support ahead of the June 11 low at $4,023. Further down, the next target is the late October 2025 low, at $3,886.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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