Fed’s tough stance on inflation triggers XAUUSD sell-off

XAUUSD prices remain under pressure near the 4,425 USD support level following hawkish comments from the Federal Reserve chairman. Quotes currently stand at 4,436 USD. Find more details in our analysis for 31 August 2026.

XAUUSD forecast: key takeaways

• Kevin Warsh’s hawkish speech at Jackson Hole was a powerful trigger for the decline in prices
• The Federal Reserve chairman indicated that monetary policy could be tightened further if there is insufficient confidence that inflation is falling towards 2%
• Traders’ attention has shifted to upcoming US labour market data and new inflation reports
• XAUUSD forecast for 31 August 2026: 4,215

Fundamental analysis

XAUUSD prices are declining for the fourth consecutive trading session as buyers attempt to hold the key support level at 4,425 USD. On Friday, prices came under strong downward pressure following Federal Reserve Chairman Kevin Warsh’s speech at Jackson Hole.

The Fed chairman suggested that the Federal Reserve could continue tightening monetary policy to combat inflation unless it receives convincing evidence that inflation is sustainably moving towards the 2% target. At the same time, he stressed that although the latest PCE and CPI readings came in better than expected, they do not yet signal a significant change in the long-term trend. Warsh also added that the 2% PCE inflation target remains unchanged.

Against this backdrop, market participants quickly reassessed the risks, raising the probability of a rate hike at the next meeting to 59.7%. Investors are now focused on upcoming US labour market data and new inflation readings. Attention is also on the meeting of G20 finance ministers and central bank governors, where discussions are expected to cover measures aimed at easing global concerns over US government debt and coordinating actions regarding Iran.

Technical outlook

XAUUSD prices are falling after breaking below the lower boundary of the bullish channel, with sellers gaining a foothold below the EMA-65. Today’s XAUUSD forecast suggests a further decline towards 4,215 USD.

Technical indicators confirm continued bearish sentiment. The Stochastic Oscillator has broken below the ascending trendline, indicating increased selling activity. Consolidation below the local support level at 4,405 USD would further confirm the bearish scenario.

An alternative scenario would come into play if prices break above the upper boundary of the descending channel and consolidate above 4,515 USD. This signal would invalidate the bearish scenario and indicate renewed growth in XAUUSD quotes.

XAUUSD overview

• Asset: XAUUSD
• Timeframe: H4 (intraday)
• Trend: bullish
• Key resistance levels: 4,465 and 4,535
• Key support levels: 4,405 and 4,355

XAUUSD trading scenarios for today

Main scenario (Sell Stop)

A breakout below the local support level, with XAUUSD prices consolidating below 4,405 USD, would indicate increased selling pressure and trigger a deeper decline.

• Current price: 4,436
• Entry level: 4,405
• Take profit: 4,280
• Stop loss: 4,445
• Risk-to-reward ratio: more than 1:3

Alternative scenario (Buy Stop)

If buying pressure strengthens and the upper boundary of the descending channel is broken, the upward momentum could resume, with consolidation above 4,515 USD serving as the bullish signal.

• Entry level: 4,510
• Take profit: 4,575
• Stop loss: 4,490
• Risk-to-reward ratio: more than 1:3

The trade idea is valid until midnight on 1 September 2026 (server time, UTC+3).

Risk factors

The main risk to the bearish XAUUSD scenario is buying pressure, which could push prices back above the EMA-65. In this case, an alternative scenario would come into play: buyers would break above the upper boundary of the descending channel and gain a foothold above the key 4,515 USD level, invalidating the bearish scenario and signalling a resumption of the XAUUSD uptrend.

Summary

The current decline in XAUUSD has been driven by investors reassessing Federal Reserve interest rate expectations in response to Kevin Warsh’s hawkish rhetoric. Further price movements will depend on US labour market macroeconomic reports, while a breakout below the current support level would open the way for a deeper correction.

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