Gold is trading near 4,348 USD per troy ounce early on Monday. The precious metal has now closed lower for three consecutive weeks.
Investors are assessing the latest US inflation data ahead of this week’s Federal Reserve meeting. Headline inflation held steady at 3.4% year-on-year in August, in line with expectations, while CPI rose 0.4% month-on-month, marking its fastest increase in three months.
Core inflation rose 0.3% month-on-month, its strongest increase since April and above the 0.2% forecast. At the same time, annual core inflation slowed to 2.4%, its lowest level since March 2021.
Earlier, producer price data also pointed to accelerating inflationary pressures, driven in part by higher energy costs amid the conflict with Iran. Meanwhile, labour market data indicated that employment conditions remain relatively stable.
After the CPI release, markets raised expectations of tighter Federal Reserve policy. The probability of a 25-basis-point rate hike this week is now estimated at around 90%, up from about 70% before the inflation data were released.
This shift in rate expectations remains a bearish factor for gold, as higher interest rates increase the opportunity cost of holding the non-yielding precious metal.
XAU/USD Technical Analysis
On the H4 XAU/USD chart, the market formed a consolidation range around 4,331. A downward move towards 4,292 and a subsequent rebound towards 4,400 have now been completed.
Today, a new downward move is developing towards 4,300. A break below this level could open the way for the bearish trend to continue towards 4,215.
The MACD indicator supports continued short-term downward momentum. Its signal line remains below zero and points firmly downward.
On the H1 XAU/USD chart, the market broke below 4,355 and completed a downward move towards 4,322. A consolidation range around 4,355 has now largely formed.
A downside breakout from this range could lead to a decline towards 4,300, with the broader bearish trend potentially extending towards 4,215.
The Stochastic oscillator supports this scenario. Its signal line remains below 50 and points sharply downwards towards 20, indicating continued short-term downside pressure.
XAU/USD Outlook
Gold remains under pressure ahead of the Federal Reserve meeting as stronger-than-expected inflation data have reinforced expectations of another rate hike.
From a technical perspective, the bearish scenario remains dominant. The immediate target is a decline towards 4,300, while a confirmed break below this level could extend the move towards 4,215.
