Gold fell on Monday, shedding roughly 0.4% as hawkish signals from Federal Reserve Chair Kevin Warsh and a surge in energy costs pushed US bond yields higher. The retreat pulled spot price back to $4,432 an ounce, after an earlier high of $4,472. Despite the daily loss, bullion is still on track to end August with a gain of more than 9%.
Warsh remarks revive rate-hike fears
Last Friday, the new Fed Chair told a conference that the central bank remains committed to fighting high inflation, even if it does not target the 2% level. “We have work to do,” Warsh said, if prices stay elevated. Money markets quickly repriced expectations. According to Prime Terminal data, investors now see a 64% probability that the Fed will raise rates at the September 16 meeting, with only 36% expecting no change at the current 3.50%-3.75% range. For the rest of 2026, markets have priced in at least 26 basis points of additional tightening.
Middle East tensions lift oil, yields
Monday’s main broader-market story was an escalation in the Middle East, after the US and Iran exchanged strikes. The flare-up drove West Texas Intermediate crude up 2.5% to $85.62 a barrel. Higher energy costs feed into inflation expectations and, by extension, raise the likelihood of higher interest rates. That dynamic weighed on gold, which tends to struggle when yields rise. The US 10-year Treasury note yield climbed two and a half basis points to 4.706%.
The US dollar, meanwhile, edged lower. The US Dollar Index (DXY) eased 0.25% to 99.42, below last week’s high of 99.72. A weaker greenback normally supports gold, but the yield headwind proved stronger on Monday.
Technicals: gold stuck between moving averages
From a chart perspective, gold is trading without clear direction. It is sandwiched between its 100-day simple moving average (SMA) near $4,370 and its 200-day SMA around $4,528. The daily candlestick formed a doji, a pattern that signals indecision. The Relative Strength Index (RSI) remains above 50, suggesting buyers still have some control, but the price action points to a sideways move in the near term.
For a bullish breakout, gold needs to reclaim $4,500 and then the 200-day SMA. Beyond that, resistance lies at the August 25 swing high of $4,697, followed by the $4,700 round number. On the downside, initial support is $4,400, then the 100-day SMA. A decisive break below that level could open the way to $4,300 and the 50-day SMA at $4,211.
Key data ahead: ISM, jobs, payrolls
Investors will have a busy US economic calendar this week. Highlights include the ISM Manufacturing and Services Purchasing Managers’ Indexes, JOLTS job openings, weekly initial jobless claims, and the August nonfarm payrolls report. Strong data could reinforce the case for a September rate hike and keep gold under pressure, while a weaker reading might ease those fears and support the metal. You can track the latest moves on our live gold price page.
Key takeaways
- Gold fell about 0.4% on Monday after Fed Chair Warsh’s hawkish comments raised the odds of a September rate hike.
- Middle East tensions pushed oil prices higher, lifting US bond yields and adding to headwinds for bullion.
- The US dollar weakened slightly, but the rise in real and nominal yields offset any benefit for gold.
- Technically, gold is range-bound between the 100-day and 200-day SMAs, with no clear breakout imminent.
Common questions
Why did gold fall on Monday despite a weaker dollar?
Gold is priced in US dollars, so a lower greenback usually helps. However, Monday’s move was driven more by rising US Treasury yields, which make non-yielding assets like gold less attractive. The jump in oil prices reinforced expectations that interest rates may stay higher for longer.
What is the current market expectation for a Fed rate hike in September?
Money markets are pricing a 64% chance of a 25-basis-point hike at the Fed’s September 16 meeting, with a 36% probability of no change. Markets also see roughly 26 basis points of total tightening by year-end.
Where are the key support and resistance levels for gold?
Immediate resistance is at $4,500, followed by the 200-day SMA near $4,528. On the downside, support sits at $4,400, then the 100-day SMA around $4,370. A break below that could lead to $4,300 and the 50-day SMA at $4,211.
Gold’s short-term outlook remains uncertain as traders weigh mixed signals from monetary policy, geopolitics, and upcoming US economic data. The metal will likely remain range-bound until a clearer catalyst emerges.