Gold price (XAU/USD) plunges on Monday after remarks by Federal Reserve (Fed) Governor Christopher Waller, who revealed that if the Consumer Price Index (CPI) rises this week, the Fed should consider interest rate hikes.
The XAU/USD drops nearly 3% below $4,000 as traders eye a retest of the yearly low near $3,900.
XAU/USD dives as Waller ties CPI upside to rate hikes.
A rise in inflation and a hawkish Warsh could set the table for a rate hike, sooner rather than later.
For a bullish continuation, Gold must surpass the $4,000 figure, followed by a downslope resistance trendline at around $4,170.
Gold price (XAU/USD) plunges on Monday after remarks by Federal Reserve (Fed) Governor Christopher Waller, who revealed that if the Consumer Price Index (CPI) rises this week, the Fed should consider interest rate hikes. The XAU/USD drops nearly 3% below $4,000 as traders eye a retest of the yearly low near $3,900.
XAU/USD dives as Waller ties CPI upside to rate hikes.
Governor Waller stated that a high reading in core inflation “would force near-term consideration of a rate hike.” Despite being hawkish, he still sees it as credible that inflation could reach the 2% goal without higher rates and stated that the labour market is closer to the Fed’s maximum-employment goal.
In the meantime, geopolitics continued to drive Gold prices. The US and Iran exchanged fire over the weekend despite signing a memorandum of understanding (MOU) that intended to keep the ceasefire going.
Tehran’s attacks on shipping vessels prompted retaliation from the US. US CENTCOM confirmed the attacks on more than 100 military targets, aimed at dismantling Iran’s forces near the Strait of Hormuz.
Iran then attacked gulf region nations that host US bases. Tehran said over the weekend that it had closed the Strait of Hormuz to tanker traffic. Energy prices have jumped since the resumption of hostilities amid fears of a supply disruption, with the US crude Oil benchmark, Western Texas Intermediate (WTI), rising nearly 6% on Monday to $75.70.
Given the backdrop, investors had priced in 33 basis points of Fed tightening toward the end of the year, according to Prime Terminal data.
Source: Prime Terminal
Catalysts for the Gold price
Ahead this week, the release of US inflation data and Fed Chair Kevin Warsh's testimony in front of the US Congress could be the main drivers of XAU’s price action. A rise in inflation and a hawkish Warsh could set the table for a rate hike, sooner rather than later.
XAU/USD technical outlook: Gold drops below $4,000 on Fed's hawkish tilt
Price action shows that the series of successive lower highs and lower lows is being respected, with Gold poised to continue its downtrend. Bears continued to gather momentum as measured by the Relative Strength Index (RSI), which is approaching oversold territory.
All that said, XAU/USD first support would be the year-to-date (YTD) low of $3,941. A breach of the latter will expose the October 28, 2025 swing low of $3,886 ahead of dropping toward the $3,500 mark.
For a bullish continuation, Gold must surpass the $4,000 figure, followed by a downslope resistance trendline at around $4,170. Above the latter, the $4,200 psychological level looms.
Gold daily chart
