XAU/USD remains on the defensive below $1,940 amid the Fed’s hawkish stance

• Gold price loses traction near $1,920, holds below the 50- and 100-hour EMAs.
• The higher-for-longer interest rate narratives in the US lift the USD and weigh on gold price.
• The first immediate resistance is located at $1,945; the initial support level is seen at $1,915.

Gold price (XAU/USD) loses momentum around $1,920 during the early European session on Monday. Meanwhile, the US Dollar Index (DXY) attracts some buyers and hovers around 105.60, near the highest level since March 2023.

That said, the higher-for-longer interest rate narratives in the US is the main driver to lift the US Dollar, which drags gold price lower. It’s worth noting that rising interest rates raise the opportunity cost of investing in non-yielding assets, implying a negative outlook for XAU/USD.

Looking ahead, the release of the US Gross Domestic Product (GDP) Annualized for the second quarter on Thursday and the Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred measure of consumer inflation on Friday will be closely watched by traders. The annual figure is expected to drop from 4.2% to 3.9%. Market players will take cues from these figures and find a clear direction in XAU/USD.

XAU/USD technical outlook

On the four-hour chart, gold price holds below the 50- and 100-hour Exponential Moving Averages (EMAs), which means the past of least resistance is to the downside. Meanwhile, the Relative Strength Index (RSI) is located in bearish territory below 50, activating the bearish momentum for gold price.

Resistance level: $1,945, $1,970 and $1,985
Support level: $1,915, $1,900 and $1,885