On Monday, September 28, XAU/USD fell below $4,200 during the Asian session and updated its low since August 5. Silver also came under pressure.
How the move unfolded Gold started the new week with a sharp decline. After losing the $4,250 zone, selling pressure intensified, and the key $4,200 level did not hold. The technical picture also remains tense: an important zone above is the $4,300 area, where the 100-day moving average passes.
Why gold is falling The main factor is expectations of further tightening by the Fed. In September, the Federal Reserve raised the rate by 25 basis points - to 3.75 – 4.00%. Fed officials continue to point to elevated inflation risks, and the market allows for another rate hike before the end of the year. The higher interest rates are, the stronger the competition between gold and interest-bearing assets: the metal itself does not generate yield.
Yields and the dollar The yield on 10-year US Treasury bonds remains above 5%, and the dollar is holding near recent highs. For gold, this is double pressure: high yields make bonds more attractive, while a stronger dollar increases the cost of the metal for buyers outside the US.
Geopolitics failed to support gold Usually, rising tensions in the Middle East boost demand for gold as a safe-haven asset. However, this time the market focused primarily on the inflationary consequences of rising oil and the possible reaction of the Fed. Over the weekend, US President Donald Trump rejected Iran's proposal related to the resumption of operations in the Strait of Hormuz and negotiations. At the same time, tensions around Saudi Arabia and the oil market persisted. FXStreet links this backdrop to additional inflation risks, rising yields and pressure on gold.
What's next For the gold market, the key levels remain $4,200 – 4,250 and resistance around $4,300. During the week, traders' attention will shift to US macroeconomic data and new signals from the Fed. These data could change rate expectations and, accordingly, the direction of the dollar, yields and gold
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