Gold Price Drops Below $4,400 as Fed Hawkish Repricing Bites
The Gold price has extended its decline, dropping below $4,400 amid hawkish repricing of Federal Reserve policy expectations. The XAU/USD pair reached fresh two-week lows at $4,375 on Tuesday, a nearly 7% drop from last week's peak near $4,700.
The US Dollar has recovered most of its pullback following Friday's Jackson Hole summit, where Fed Chairman Kevin Warsh made hawkish comments that boosted the greenback. Strategists at Brown Brothers Harriman note that policy expectations remain skewed toward further tightening and market pricing implies 60bps of tightening over the next twelve months.
The technical analysis suggests a bearish trend for Gold, with momentum indicators in the daily chart entering bearish territory. The Relative Strength Index (RSI) is testing levels below the key 50 line, and the Moving Average Convergence Divergence (MACD) has slipped below zero.