Gold is trading near $4,348 per troy ounce early Monday, having closed lower for three straight weeks. Stronger-than-expected US inflation data has pushed the market's odds of a Federal Reserve rate hike this week to around 90%, and technical charts point to further downside toward $4,300 and then $4,215.
Investors are weighing fresh US inflation data ahead of this week's Federal Reserve meeting, and gold has borne the brunt of it. The metal has now closed lower for three consecutive weeks.
Inflation data hardens rate-hike bets
Headline inflation held steady at 3.4% year-on-year in August, in line with expectations. Monthly CPI rose 0.4%, its fastest pace in three months. Core inflation climbed 0.3% month-on-month, the strongest reading since April and above the 0.2% forecast. Annual core inflation, however, slowed to 2.4%, its lowest level since March 2021.
Producer price data also pointed to accelerating inflationary pressure, driven in part by higher energy costs amid the conflict with Iran. Labour market data, meanwhile, indicated that employment conditions remain relatively stable. After the CPI release, markets raised the probability of a 25-basis-point rate hike this week to around 90%, up from about 70% before the data came out. The shift keeps pressure on gold, since higher rates raise the opportunity cost of holding a non-yielding asset.
Chart levels point lower
On the four-hour XAU/USD chart, gold formed a consolidation range near 4,331, then completed a move down to 4,292 before rebounding to 4,400. A new downward move is now developing toward 4,300, and a break below that level could open the way toward 4,215. The MACD indicator supports further short-term downside, with its signal line below zero and pointing down.
Separately, a five-hour chart tracked by Investing.com shows price hugging $4,360.65, just below its 200-period moving average, and directly atop the 50% Fibonacci retracement at $4,355.20. That report notes the RSI sits just above 39 and a head-and-shoulders pattern is roughly 80% complete, with its neckline at the current support zone — a break below $4,355 would risk a deeper reversal.
Outlook stays bearish into the Fed decision
Gold remains under pressure heading into the Fed meeting as the inflation data reinforces bets on another rate hike. The bearish scenario stays dominant on the technical picture, with an immediate target of 4,300 and a confirmed break below that level extending the move toward 4,215.
Sources: ActionForex, Commodities & Futures News
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