Last Updated on 21/09/2026
- Gold prices fell to around $4,365 during early Asian trading on Monday.
- Iran issued a warning after reportedly receiving information that the US could resume military action.
- Fed’s Schmid backed a rate hike as inflation spreads more broadly above 3%.
Gold (XAU/USD) edged lower to around $4,365 during early Asian trading on Monday as the precious metal came under pressure from renewed Middle East tensions and hawkish comments from Federal Reserve officials. Investors are now looking ahead to further Fed commentary later this week for fresh signals on the US interest-rate outlook.
According to Reuters, governments across the Middle East are preparing for a possible escalation after Iran said it had received intelligence indicating that Washington was considering a renewed bombing campaign against the Islamic Republic. While geopolitical tensions can traditionally support safe-haven demand for gold, concerns that a conflict-driven rise in oil prices could fuel inflation may limit the upside for the precious metal.
The Federal Reserve raised its benchmark interest rate by 25 basis points last week to a range of 3.75%-4.0% and signaled that additional increases could be considered in the coming months. Markets currently price in a 56.5% probability of another rate hike at the Fed’s October meeting, according to the CME FedWatch Tool. Higher interest rates generally weigh on gold because the non-yielding asset becomes less attractive compared with interest-bearing investments.
Hawkish remarks from Fed policymakers are also keeping a lid on gold’s gains. Kansas City Fed President Jeffrey Schmid said Friday that he supported the latest rate increase, pointing to recent data showing inflation running above 3%.
Meanwhile, Minneapolis Fed President Neel Kashkari said Sunday that inflation in the US remains elevated across several parts of the economy and cannot be attributed solely to higher energy and oil prices.
Gold Remains Under Pressure From Yields and the US Dollar
OCBC strategists noted that elevated Treasury yields and a stronger US Dollar could continue to restrict gold’s near-term gains, with the Fed’s latest decision adding to the pressure created by higher interest rates and a firmer dollar.
However, the bank maintained that the current environment does not necessarily weaken gold’s medium-term outlook. With markets already pricing in a relatively hawkish Fed path, weaker-than-expected US economic data could push Treasury yields and the Dollar lower, potentially providing renewed support for gold.
Schmid’s Hawkish Stance Reinforces Higher-for-Longer Rate Expectations
Fed Governor Schmid delivered a notably hawkish message, emphasizing that recent data indicate inflation is running above 3%. He argued that the latest rate increase represents another step toward bringing inflation back toward the Fed’s 2% target.
His comments also highlighted that price pressures remain widespread across various goods and services rather than being limited to energy costs. Schmid pointed to an imbalance between supply and demand while noting that the broader economy and labor market remain relatively solid. This combination could strengthen expectations that interest rates may remain elevated for longer and provide continued support for the US Dollar.
The FXS Fed Sentiment Index also remained firmly in hawkish territory, rising 0.42 points to 152.09. The move suggests that Schmid’s comments added further tightening pressure to expectations surrounding Fed policy. A sustained hawkish stance could reduce expectations for near-term rate cuts while maintaining a supportive backdrop for the Dollar against major currencies such as the Euro and Japanese Yen.
Technical Analysis: Gold Holds Above the 100-Day SMA
On the daily chart, XAU/USD maintains a constructive technical structure while trading above its 100-day simple moving average (SMA). However, the price remains below the middle Bollinger Band, indicating that the market is currently consolidating rather than extending a strong directional move.
The Relative Strength Index (RSI) stands at 51.13, close to neutral levels and showing a slight bullish bias. This suggests that momentum remains balanced, with neither buyers nor sellers showing clear dominance.
On the upside, the Bollinger middle band around $4,410 represents the first significant resistance level. A daily close above this area could expose the upper Bollinger Band near $4,615.
On the downside, the 100-day SMA around $4,320 provides the first major support level. If selling pressure intensifies, the lower Bollinger Band near $4,200 could offer additional support. As long as gold remains above these key technical levels, the broader bullish structure remains in place.
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