Is Gold Losing Its Shine? XAU/USD Dips Below $2,400 Amid Fed Hawkishness - Geopolitical Tensions Could Reignite Safe-Haven Demand

The Binance price chartprecious metals market opened the week with gold (XAU/USD) trading cautiously near $2,385 during Asian hours, reflecting a 0.38% decline from Friday's close. This downward pressure follows a series of hawkish remarks from Federal Reserve officials that have reshaped interest rate expectations for 2024.

Market participants are digesting comments from multiple Fed policymakers suggesting the central bank may maintain restrictive policies longer than previously anticipated. New York Fed President John Williams left the door open for additional rate hikes if inflation data warrants, while Chicago Fed's Austan Goolsbee noted disappointing progress on price stability. Atlanta Fed President Raphael Bostic reinforced this stance by projecting no rate cuts before year-end.

These developments have created headwinds for non-yielding assets like gold, as higher interest rates typically increase the opportunity cost of holding precious metals. The dollar's relative strength has further pressured gold prices, with the DXY index holding near five-month highs.

However, escalating geopolitical risks continue to provide underlying support for the yellow metal. Recent weeks have seen heightened tensions between Israel and Iran, including retaliatory strikes following an attack on an Iranian diplomatic facility. While immediate escalation appears contained after US lawmakers approved new military aid to Israel, the situation remains fluid and could quickly reignite safe-haven flows.

Technical indicators show gold maintaining an overall bullish trend despite the recent pullback. The 20-day SMA at $2,302 and 50-day SMA at $2,173 both slope upward, with price action remaining well above these key moving averages. Immediate support appears at $2,370 (daily pivot S1), followed by $2,349 (S2). Resistance levels to watch include $2,400 (Fibonacci 38.2%) and $2,415 (pivot R1).

Traders should monitor upcoming US economic data releases and any developments in Middle East tensions, as these factors will likely determine whether gold can reclaim the $2,400 level or extend its current correction. The precious metal's ability to hold above its 20-day moving average suggests underlying strength despite short-term bearish pressure.

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