Gold Forecast: XAU/USD hits its lowest level of 2026

As the trading week moves forward, one of the most relevant developments across financial markets has been the continued weakness in gold. The metal has now posted two strong bearish sessions, with a short-term decline of just over 5.00%, once again highlighting a clear selling bias in XAU/USD.

Gold remains under pressure in an environment where the US dollar continues to act as an important alternative for investors. At the same time, markets remain focused on upcoming US economic data, which could reinforce expectations of a more aggressive Federal Reserve. As long as investors continue to price in higher rates and a stronger dollar, gold could remain exposed to further selling pressure over the next few sessions.

Could the release of US PCE inflation affect gold?

Tomorrow, the United States will publish its Core PCE inflation data. The figure is expected to come in at 3.4% for May, slightly above the 3.3% recorded in April. This indicator measures inflation pressures over the latest month while excluding food and energy, offering a clearer view of underlying price pressures.

This release is especially important because it is one of the inflation gauges most closely followed by the Federal Reserve. In a market already starting to anticipate a more aggressive central bank stance, a reading in line with expectations or above them could strengthen the case for higher rates over the coming months.

Source: TradingEconomics

This event could be key for gold because one of the main factors weighing on demand recently has been the expectation of a more restrictive Fed. According to the CME Group, markets are assigning a probability close to 50% that the Fed could raise rates from the current 3.75% reference level at the September 16 meeting. For that reason, the PCE inflation release could help confirm whether this expectation remains in place or gains even more strength ahead of the remaining policy decisions in 2026.

Source: CMEGROUP

For gold, this backdrop is not particularly favorable. The possibility of a more aggressive Fed has strengthened the US dollar, as expectations of higher rates increase the appeal of dollar-denominated assets. This has been reflected in the DXY, the index that measures the strength of the dollar, which is currently showing a strong move above the 101-point area and marking its highest level of 2026.

Source: TradingEconomics

The combination of higher rates, persistent inflation, and a stronger dollar continues to work against gold. First, gold is priced in dollars, so a stronger USD makes it more expensive for investors using other currencies. Second, the dollar and US Treasury bonds can become more attractive alternatives when investors are looking for stability, especially because bonds offer yield, while gold does not.

For this reason, the PCE release could become an important catalyst for the next few trading sessions. If the data reinforces expectations of a more restrictive Fed, selling pressure in XAU/USD could remain in place in the short term.

 

Technical outlook for gold

Source: StoneX, Tradingview

• The bearish trendline continues to dominate: The most relevant technical pattern on the daily gold chart remains the bearish trendline that has been in place since March. This structure continues to reflect an important selling bias, especially as the 50-period moving average approaches a possible crossover below the 200-period moving average, which could confirm a stronger technical signal of weakness. Even so, the recent excess in selling pressure could also open the door to short-term bullish corrections.
   

• RSI: The RSI remains below the 50 neutral area, suggesting that selling pressure continues to dominate recent price action. However, a potential short-term bullish divergence is also starting to appear, as the RSI holds similar lows while gold continues to mark lower lows. This signal could point to excessive selling pressure and create room for short-term upside corrections.
   

• MACD: The MACD histogram remains very close to the 0 neutral line, suggesting balance between the short-term moving averages. This indicates that, although the bearish bias remains in place, the recent phase of indecision has not fully disappeared.
   

Key levels to watch:

• USD 4,345 – Crucial resistance: This level is located near relevant highs and aligns with the broader bearish trendline, making it the most important upside barrier for now. A breakout above this area could put the bearish structure at risk and open the door to a more relevant buying bias over the coming weeks.
   
• USD 4,182 – Nearby barrier: This recent neutrality zone now works as the closest resistance to watch. It could act as a tentative barrier if short-term bullish corrections start to develop.
   
• USD 3,886 – Critical support: This level is located near the October 2025 lows and is currently the most important bearish barrier to watch. If price continues to move toward this area, the selling bias could strengthen further and extend the current bearish trendline over the coming weeks.
   

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25