Key Moments
- XAU/USD drops to a one-week low around $4,121 and is set for a 1.7% weekly decline.
- Futures markets price a 77% probability of a Fed rate hike at the October meeting and a 90% chance of at least a quarter-point move by year-end.
- Bearish technicals persist, with XAU/USD trading near $4,147.83 and the year-to-date low at $4,023 in focus.
Gold Under Pressure as Fed Outlook Turns More Hawkish
Gold (XAU/USD) continues to weaken for a third straight session on Friday, slipping to one-week lows near $4,121 and heading for a 1.7% loss on the week. The metal is also on track to extend a three-week losing streak.
The decline comes even as the US Dollar softens somewhat, with rising expectations for future Federal Reserve (Fed) tightening in 2026 limiting any meaningful rebound in bullion. These expectations are acting as a persistent drag on gold prices and are capping recovery attempts.
Fed Policy Signals Sustain Rate-Hike Bets
The Fed kept interest rates unchanged on Wednesday. However, the accompanying policy statement highlighted solid economic activity and improvements in the labor market. Updated rate projections indicated that nearly half of Fed policymakers anticipate at least one rate increase in 2026.
The newly appointed Chairman, Kevin Warsh, reinforced this more hawkish tone by clearly emphasizing the Fed’s commitment to returning inflation to its 2% target, dispelling doubts about a more dovish stance.
Futures markets now reflect a 77% probability of a rate hike at the Fed’s October policy meeting, up sharply from below 40% one week earlier. Market pricing also implies a 90% likelihood of at least a quarter-point tightening before year-end.
The US Dollar has eased somewhat on Friday as trading conditions are subdued amid the Juneteenth bank holiday in the US. Even so, the stronger tightening outlook is seen as likely to limit downside in the Dollar and continue to weigh on gold price recoveries.
Technical Picture: Bears Maintain Control
XAU/USD is last quoted around $4,147.83 and retains a bearish short-term bias. On the daily chart, the price structure is characterized by a pattern of lower highs and lower lows, reinforcing the negative tone.
The Relative Strength Index (RSI) on the daily timeframe remains well below the 50 level, while the Moving Average Convergence Divergence (MACD) indicator is positioned below zero at -7.15. Both signals point to ongoing downside pressure.
So far, sellers have been unable to push prices decisively below the $4,100 area, but attempts to move higher have been fragile. This lack of buying conviction could encourage bears to challenge the year-to-date low of $4,023, recorded on June 11.
Below that level, the late October 2025 trough near $3,885 is the next notable support area on the downside.
| Key Gold Technical Levels (XAU/USD) | Level | Comment |
|---|---|---|
| Current price | $4,147.83 | Maintains bearish near-term tone |
| Near-term support | $4,100 area | Zone where bears have been capped so far |
| Year-to-date low | $4,023 | June 11 low and key downside focus |
| Next support | Near $3,885 | Late October 2025 low |
| Key resistance | Around $4,370 | Confluence of descending trendline from March highs and weekly top |
| Higher resistance zone | $4,585 area | Late May – early June highs |
| RSI (daily) | Below 50 | Signals bearish momentum |
| MACD (daily) | -7.15 | Below zero, indicating downside bias |
On the upside, a cluster of resistance is located near $4,370, where a descending trendline drawn from the March peaks meets the weekly high. A decisive break above that region would be needed to ease immediate downside pressure. If that hurdle is cleared, attention would likely shift to the late May – early June peaks around the $4,585 zone.
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