Gold Price Forecast: XAU/USD steadies near $4.400 lows amid rising Fed tightening bets

Gold (XAU/USD) shows marginal gains on Monday, with price action hovering around $4.450 at the time of writing yet unable to take off from last weeks lows in the $4,400 area after depreciating more than 4% late last week. Rising bets that the Federal Reserve (Fed) will hike interest rates in September, coupled with the resumption of hostilities in Iran, are buoying the US Dollar and weighing on precious metals.

Bullion tanked on Friday as Fed Chairman Kevin Warsh conveyed an unexpectedly hawkish message at the Jackson Hole summit. Warsh urged policymakers to focus on prices, and said that the central bank has “work to do” to bring inflation to the bank‘s 2% target. Investors ramped up bets of a September hike to 61% from 36% the day before, according to the CME’s FedWatch Tool.

Apart from that, the US and Iran exchanged attacks on Sunday to put an end to about one month of a tense truce. The US military attacked the Iranian island of Larak on Sunday, where the Islamic Revolutionary Guard Corps (IRGC) were allegedly preparing missiles to place sea mines in the Strait of Hormuz. Tehran responded by targeting US airbases in Jordan and the United Arab Emirates. The risk-off reaction has underpinned support to the safe-haven US Dollar.

XAU/USD trades at $4,450 after an impulsive reversal on Friday that pushed price action below the 200-day simple moving average (SMA) at $4,528. This is a very popular indicator for traders, and Friday's clear move below it gives fresh hope for bears.

Momentum indicators in the bearish charts show a neutral-to-negative stance, with the Relative Strength Index (RSI) at 54.36 easing into a more neutral zone and the Moving Average Convergence Divergence (MACD) indicator drifting into negative territory, which hints at waning upside momentum and scope for further consolidation or downside probes.

Immediate support is seen at Friday's floor in the $4,400 area, followed by the August 14 low near $4,310 and the August 6 low, near $4,225. Bulls, on the other hand, are likely to be challenged at the mentioned 200-day SMA, at $4,528, and the August 27 low near $4,565 ahead of last week's highs, near $4,700.;