23.09.202617:23 Forex Analysis & Reviews: XAU/USD – Price Analysis and Forecast: Gold Continues to Decline

Gold (XAU/USD) continues to decline firmly during the day, correcting part of the gains recorded the previous day and returning to the round $4,300 level. Demand for the US dollar remains high due to the Federal Reserve's hawkish approach, which is a key factor behind capital outflows from the precious metal.

At its September meeting, the Fed raised interest rates for the first time in more than three years and indicated that another rate hike is planned this year. Moreover, St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee openly spoke in favor of further monetary policy tightening due to the continuing high risks associated with inflation. Boston Fed President Susan Collins and Richmond Fed President Tom Barkin also did not rule out additional rate hikes to control inflation.

According to CME Group's FedWatch Tool, traders are pricing in a 90% probability of a rate hike in December. These factors, together with persistent geopolitical uncertainty, continue to support the dollar as a safe-haven asset.

As for developments in the Middle East, US President Donald Trump stated at the UN General Assembly that an important decision needs to be made: to reach a deal with Iran, and, if the conflict is not resolved, to destroy the Islamic Republic. In addition, new, stricter US sanctions aimed at paralyzing Iran's aviation industry take effect on Wednesday. At the same time, Iranian Foreign Minister Abbas Araghchi met with US Special Envoy Steve Witkoff to discuss Tehran's conditions for the resumption of shipping through the Strait of Hormuz. Trump confirmed that the talks had been successful but declined to disclose the details. This keeps the geopolitical risk premium relevant, which also supports the US dollar and puts pressure on gold prices.

At the same time, US bond yields remain at low levels (below multi-year highs), as the recent decline in oil prices is helping to ease concerns about an uncontrolled rise in inflation. This, in turn, is preventing gold prices from experiencing a broader decline. Nevertheless, the Purchasing Managers' Index (PMI) once again put pressure on precious-metal prices. Going forward, demand for the dollar and short-term fluctuations in gold prices will depend on comments from influential members of the Federal Open Market Committee (FOMC) and new geopolitical developments. However, the main focus will be on the important meeting between US President Donald Trump and Chinese President Xi Jinping scheduled for Thursday; this summit could have a significant impact on precious-metal price dynamics.

From a technical perspective, XAU/USD is trading below the round $4,300 level. If prices fail to return above this level, they will become vulnerable to a decline toward the September low. The 100-period exponential moving average (EMA), currently at $4,360, is now an important obstacle. A break above it would allow the bulls to regain momentum. As long as the oscillators remain negative, the bears have the advantage.