Gold Price Forecast: XAU/USD retraces gains and nears two-month lows at $4,104

Gold (XAU/USD) retraces Tuesday’s gains on Wednesday and resumes its broader bearish trend, with the US Dollar (USD) appreciating across the board, as investors brace for the release of the minutes of the latest Federal Reserve (Fed) meeting. The XAU/USD pair trades below $4,120 after retreating from the $4,180 area on Tuesday, drifting closer to the two-month low at $4,104.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six majors, has retraced previous losses as investors grow wary of selling the USD ahead of the Fed minutes’ release. Beyond that, Oil prices have bounced up amid news of fresh tensions in the Middle East, setting some of the main US Dollar peers, namely the Euro, under pressure.

The Fed hiked rates by 25 basis points, bringing the fed funds rate to the 3.75%-4% range at the September meeting, and Chair Kevin Warsh surprised with an unequivocal hawkish message. Hopes of another interest rate hike in October, however, have faded amid soft inflation and employment reports and mixed comments by policymakers. That said, markets remain confident that the bank will hike rates again in December and at least one more time in early 2027.

Technical Analysis: Support around $4,100 likely to be tested again

XAU/USD trades at $4,119, maintaining a bearish near-term bias and holding under a descending trendline resistance from mid-August highs. Momentum indicators on 4-hour charts remain negative, with the Relative Strength Index (14) below 40 and tthe Moving Average Convergence Divergence (MACD) in negative levels, both hinting at persistent downside pressure.

A breach of the mid-term lows at $4,104 clears the path towards the late July and early August lows around the $4,000 psychological area, ahead of the year-to-date (YTD) low, at $3,941.

Bulls, on the other hand, should confirm above the mentioned trendline resistance, now around $4,200, and the top of the last two weeks' trading range, at $4,227 to gain confidence. Such a move would shift the focus toward the September 25 high, around $4,310, and the September 11 and 18 highs past $4,400.