Gold Price Forecast: XAU/USD tests $4,300 amid Fed tightening hopes, geopolitical tensions

Gold (XAU/USD) maintains its bearish trend on Wednesday, as higher geopolitical tensions and growing bets of a Federal Reserve (Fed) rate hike in September boost speculative support to the US Dollar. The precious metal is testing the support area around $4,300 as of writing, 3.25% down on the week so far.

Bullion has been struggling since the US Fed Chairman Kevin Warsh boosted expectations of an interest rate hike in September at the Jackson Hole central banker’s summit on Friday. Warsh struck an unexpectedly hawkish tone, affirming that prices should be the central bank’s main concern right now and that they have “work to do” to bring interest rates to the 2% target.

Beyond that, the resumption of hostilities between the US and Iran has increased risk aversion, providing additional support for the safe-haven USD. The US military launched a new wave of strikes on Islamic Revolutionary Guard Corps (IRGC) positions across Iran, which were responded to with attacks on US bases in Bahrain, Iraq and Jordan.

Technical Analysis: Gold comes under growing bearish pressure

XAU/USD trades at $4,310, holding an immediate bearish tone below the 200-day simple moving average (SMA), with momentum indicators showing growing negative traction. The daily Relative Strength Index (RSI) has broken below the key 50 line, while the Moving Average Convergence Divergence (MACD) is deeply negative at -30.53, altogether hinting at solid downside momentum.

A clear break below the mentioned $4,300 area (August 14, 18 and 19 lows) would clear the path toward the August 6 low, near $ 4,225, ahead of the late July lows in the $4,000 area

On the topside, the previous support area around $4,450 (August 20 low) is likely to act as resistance now. Further up, the mentioned 200-day SMA, at the $4,530 area, will challenge bulls ahead of last week's highs, near $4,700.