Go short on gold upon breaking $4,300

The picture for XAUUSD is getting clearer this week, and it all comes down to the Federal Reserve (Fed). Fresh Consumer Price Index (CPI) data has thrown the outlook for US monetary policy into flux and lit a fire under expectations of an aggressive move by the central bank.

So, what exactly did the print reveal? The latest report from the American Department of Labor showed that inflation isn't backing off without a fight. The core reading surged 0.3% month-over-month, beating what analysts had penciled in.

And the annual numbers tell the same story. In fact, the CPI came in at 3.4%—a clear sign that sticky price pressures are firmly rooted in the US economy. Big banks, including UBS, emphasize that the Fed has boxed itself into a corner after the hawkish talk at Jackson Hole and a series of strong data. The regulator has little choice but to tighten monetary policy if it wants to keep its credibility intact.

Typically, this is bad news for gold. Rising rate hike odds and a hardline Fed often push Treasury yields higher. To be specific, 10-year notes have already risen to around 4.95%. And with real yields being this high, holding a precious metal that pays no interest starts to feel like a costly proposition.

But here is the kicker: if the American central bank increases borrowing costs at its next meeting and doubles down on its hawkish outlook, gold could slice through the $4,300 support and tumble toward $4,200–$4,250. On the other hand, if the tone softens, expect the metal to bounce back in a hurry.

The ultimate recommendation is to sell the XAUUSD pair upon breaching the $4,300 support. Place Take Profit at $4,120. Set Stop Loss at $4,450.

Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow you to enter a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.