18.08.202619:23 Forex Analysis & Reviews: XAU/USD – Price Analysis and Forecast: Gold Remains Under Pressure

Gold (XAU/USD) continues to trade around $4,400, ending a two-day advance amid broad-based US dollar strength. Inflation risks associated with higher oil prices reinforce expectations that the US Federal Reserve (Fed) will raise interest rates at least once in 2026. In addition, the confrontation between the United States and Iran is sustaining the geopolitical risk premium and supporting the dollar as a safe-haven asset, which in turn is weighing on the price of the precious metal.

In the latest developments in the Middle East, US President Donald Trump stated that Iran must surrender in order to bring the nearly six-month-long war to an end. Trump also said that the United States would not extend the Memorandum of Understanding with Iran, which expired on Monday. In addition, he reiterated the idea of recognizing the Strait of Hormuz as part of US territory and threatened military strikes against Oman if it obstructed efforts to restore shipping through this strategically important waterway. This comes amid an escalation in attacks by Iran-backed Houthi rebels in Yemen against Saudi Arabia.

Houthi military spokesman Yahya Saree confirmed that the group had launched several ballistic missiles targeting a Saudi military landing ship and four accompanying patrol boats off the coast of Mocha. This could further complicate commercial shipping through the Bab el-Mandeb Strait, one of the world's most important trade routes, and increase concerns about energy supplies, pushing oil prices to a two-week high.

Investors remain concerned that higher energy prices could trigger renewed inflationary pressure, which, combined with hawkish Fed expectations, is supporting elevated yields on US Treasury bonds.

According to TD Securities, the Fed is likely to "remain on hold throughout the forecast period," based on the assumption that "inflation will remain elevated through the end of the year" and that "the labor market has stabilized, allowing the FOMC to focus on its inflation mandate." The bank also emphasized that "if the Fed takes any action this year, it is more likely to be a hike than a cut," adding that with "new leadership that favors a more dovish reaction function, data dependence is likely to become more important in determining the future direction of monetary policy."

These expectations partly offset last week's weak US inflation and retail sales data, which led investors to scale back expectations for an imminent Fed rate hike.

According to the CME Group FedWatch Tool, traders see a 64% probability that the US central bank will leave interest rates unchanged at its September meeting. Nevertheless, investors still assign a higher probability to at least one Fed rate hike by the end of the year. These expectations are supporting renewed demand for the dollar and triggering intraday selling in gold, although the downside potential remains limited.

Traders may also exercise caution before opening aggressive positions, preferring to wait for additional signals regarding the future course of Fed monetary policy. Therefore, attention should focus on the release of the FOMC meeting minutes on Wednesday, which could have a significant impact on the short-term dynamics of the US dollar and provide gold with the necessary impetus.

The mixed fundamental backdrop calls for caution before potentially positioning for further depreciation.

From a technical perspective, the precious metal continues to struggle to hold above the $4,400 level. However, the oscillators remain positive. Consolidation above $4,400 would allow the bulls to move toward the 200-day simple moving average (SMA), which is currently at $4,500. Immediate support is provided by the 9-day exponential moving average (EMA), below which prices would find further support at the 200-day EMA at $4,300.