Gold Price Forecast: XAU/USD nears $4,100 as Fed tightening bets rise
- Gold hits one-week lows at the $4120 area, on track for a 1.7% weekly drop.
- Rising bets of Fed monetary tightening in 2026 are weighing on precious metals.
- The technical picture shows bears in control, with the YTD low at $4,023 at hand.
Gold (XAU/USD) extends losses for the third consecutive day on Friday, hitting one-week lows at $4,121, on track to close a three-week losing streak. The precious metal struggles, despite a somewhat softer US Dollar, as rising bets of Federal Reserve (Fed) rate hikes are acting as a headwind for Gold rallies.
The Fed left interest rates steady on Wednesday, but the monetary policy statement noted solid economic activity and an improvement in the labour market. The interest rate projections showed that nearly half of the bank’s policymakers see at least a rate hike in 2026, and the new Chairman, Kevin Warsh, dissipated doubts about his dovishness, with a clear commitment to bring inflation back to the 2% target.
Futures markets are now pricing a 77% chance of a Fed rate hike at October’s monetary policy meeting, up from less than 40% last week, while the odds for at least a quarter-point tightening before the year-end are priced at 90%. The USD has lost some steam on Friday, with markets at half throttle amid the Juneteenth bank holiday in the US, but these hopes are likely to keep Dollar bears subdued and weigh on Gold recoveries.
Technical Analysis: Bears eye 2026 low at $4,023
XAU/USD trades at $4,147.83, keeping a bearish near-term tone with the daily chart showing a sequence of lower highs and lower lows. The Relative Strength Index (RSI) in the mentioned timeframe remains capped well below the 50 line, while the Moving Average Convergence Divergence (MACD) holds below zero at -7.15, both suggesting lingering downside pressure.
Bears have remained contained above $4,100 so far, but upside attempts are weak, which might convince sellers to retest the year-to-date low of $4,023 (June 11 low). Further down, the late October 2025 low, near $3,885, emerges as the next target.
On the topside, the confluence between the descending trendline from March highs and the weekly top, around $4,370, is likely to pose significant resistance. If that level gives way, the next target is the late May-early June highs at the $4,585 area.
(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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