Gold drops below $4,000 as Fed hawkishness boosts USD strength

Gold prices have retreated sharply below the psychological $4,000 level, falling 1.8% to $3,965 per ounce as hawkish Federal Reserve signals strengthen the US dollar. The precious metal's decline accelerated after Fed officials reiterated their commitment to maintaining higher rates for longer to combat persistent inflation. The US Dollar Index surged 0.6% to 106.50, creating significant headwinds for dollar-denominated commodities. EUR/USD slipped 0.4% to 1.0790, while AUD/USD dropped 0.7% to 0.6420, reflecting broad dollar strength across major pairs. Technical analysis shows gold breaking below key support at $3,980, with the next target at $3,940 (200-day moving average). Rising real yields continue to diminish gold's appeal as a non-yielding asset. Traders should monitor upcoming US employment data, which could either reinforce the Fed's hawkish stance or provide relief for gold bulls if it shows labor market weakness.