Gold prices slipped to a two-week low on Tuesday, with the metal trading around $4,460 per ounce as hawkish signals from the U.S. Federal Reserve and rising geopolitical tensions reinforced expectations of tighter monetary policy.
The decline follows a second consecutive session of gains for oil prices, which rose after U.S. strikes on an island in the Strait of Hormuz and retaliatory attacks by Iran on the UAE and Jordan. The escalation in the region has heightened energy-price risks and strengthened the case for a near-term U.S. interest-rate increase, an environment typically unfavourable for non-yielding assets like gold.
Federal Reserve Chair Kevin Warsh indicated that additional policy tightening may be required unless clearer evidence emerges that inflation is sustainably returning to the central bank’s 2% target. Markets have since priced in more than a 65% probability of a September rate hike, up from approximately 36% prior to his remarks.
Despite the recent pullback, gold posted strong gains in August, advancing roughly 10% for the month. The advance was supported by the U.S. Treasury’s decision to double long-term bond buybacks, which revived demand for the debasement trade and heightened concerns over the dollar’s stability.
Technical analysis suggests limited immediate support for gold. On the H4 chart, the metal has formed a consolidation range centered around $4,433, with potential for an extension toward $4,500 on the upside or $4,377 on the downside. The break below an upward channel at $4,460 keeps a further decline toward $4,320 as the primary scenario, with the MACD indicator signaling continued short-term downside momentum.
On the H1 chart, gold completed a move to $4,395 before correcting to $4,464. A wide consolidation range has formed below $4,500, and a breakdown could open the path toward $4,377, with scope for a further decline to $4,318. The Stochastic oscillator’s signal line, currently below 50 and trending toward 20, reinforces the bearish short-term outlook.
The metal’s near-term direction remains contingent on U.S. economic data and geopolitical developments, with further downside toward $4,377 and potentially $4,318 appearing likely under the analysis’ scenario.
