Gold (XAU/USD), after marking a new monthly low, returned above $4,300. Further declines are being restrained as traders await key central-bank decisions this week before committing to a final directional view for the metal.

The Federal Reserve, the Bank of England and the Bank of Japan will announce policy decisions on Wednesday, Thursday and Friday respectively. At the same time, growing conviction that central banks will maintain a hawkish stance under pressure from inflationary risks tied to oil prices continues to weigh on gold.

Crude oil prices remain near the highs reached on Friday — the highest levels since May 21 — amid Middle East tensions and clashes in the Strait of Hormuz. According to recent reports, Iran-backed Yemeni Houthis claimed drone and missile attacks on a military base in southern Saudi Arabia. Moreover, a planned meeting of Gulf states and Iran about the Strait of Hormuz was postponed, keeping geopolitical uncertainty elevated and supporting high oil prices. The situation is exacerbated by recently high US inflation readings, which reinforce expectations of Fed rate hikes.

According to CME Group's FedWatch tool, traders price in a Fed rate hike at over 85% for the two-day meeting on Wednesday. Those expectations strengthened after last week's PPI and CPI releases, which showed inflationary pressure in both wholesale and retail sectors in August. This factor, combined with geopolitical uncertainty, pushed the US dollar — the safe-haven currency — to monthly highs, suggesting the path of least resistance for XAU/USD remains downward.

At the same time, US President Donald Trump has put additional pressure on the Fed, urging rates to remain unchanged or even be cut, arguing that no country should have interest rates lower than the United States. This environment restrains traders from opening aggressive short positions on gold, so it is sensible to wait for confirmation of a move below $4,300 before opening significant positions betting on a further decline in the precious metal's price. Nonetheless, the fundamental backdrop described above suggests that any recovery attempts will likely be limited and may be viewed as selling opportunities.

August's US inflation reading (CPI) came in above expectations, prompting a revision of market odds toward a higher probability of a fed-funds rate increase. This sets the tone for this week's FOMC and BoJ meetings. In addition, political influence on the Fed — both real and perceived, including President Trump's calls for lower rates — may be a material factor for investors when assessing next steps by the central bank.

From a technical perspective, bulls are attempting to hold above the 200-day EMA. If they succeed, bearish pressure will be reduced. But mixed oscillators and a negative RSI weaken the bulls' case. The 50-day SMA provided support. Resistance stands at $4,360; clearing that level would put the round $4,400 mark into view.