Gold has hit a wall this week, falling to two-week lows near $4,320 and retreating 8.7% from last week’s three-month highs near $4,700. The main driver is clear: Fed Chair Warsh’s hawkish Jackson Hole remarks, in which he said the Fed still has "work to do" unless there is clearer evidence that inflation is returning to target, pushed September hike odds higher from about 36% before his speech to more than 66% today. Higher Treasury yields and renewed Middle East tensions, following fresh U.S. strikes and Iranian retaliation against the UAE and Jordan, have added further pressure.

Even with the sharp pullback, the broader backdrop remains constructive. Gold still rose about 10% in August alone after the U.S. Treasury’s surprise decision to double its long-dated bond buyback programme revived concerns about fiscal credibility and reinforced the so-called debasement trade that has supported much of this year’s rally. That leaves the market sensitive to any new read on rates, inflation, or labor-market momentum, because gold has been trading as a macro hedge as much as a momentum asset.

Attention now shifts to Friday’s Non-Farm Payrolls report, which is the week’s key catalyst and the next test of the recent shift in policy expectations. A weaker-than-expected reading could quickly unwind the hawkish repricing and restore gold’s upward momentum, while a strong report would likely deepen the current correction ahead of the Fed’s September 15–16 meeting.

Technical Analysis of XAU/USD

The XAU/USD chart shows gold has pulled back sharply from the 4,698.73 highs and is now trading between two important technical areas. On the downside, price is holding above the 0.618 Fibonacci retracement near 4,265, which lines up with the ascending trendline drawn from the late-July lows. On the upside, it remains below the 0.5 retracement near 4,348, which aligns with the 200-period EMA at 4,367.

Bullish Scenario

If buyers defend the 0.618 retracement and the ascending trendline, the broader recovery structure remains intact. A move back above the 0.5 retracement and the 200-period EMA would reopen the path toward the descending trendline, with potential to test the 0.382 level near 4,431.

Bearish Scenario

If gold breaks decisively below the 0.618 retracement and the ascending trendline, it would suggest the correction has more room to run. In that case, the 0.786 level near 4,147 would come into view, and a deeper decline could lead to a full retest of the 3,997 low that supported the entire August rally.

With price compressed between support from a trendline-Fibonacci confluence below and resistance from an EMA-Fibonacci cluster above, gold’s next move is likely to show whether Friday’s jobs report revives strength or confirms that the correction still has further to go.