Fundamental analysis of XAU/USD

Gold (XAU/USD) is under considerable pressure as its monthly decline is the largest since February. This trend is driven by growing expectations of a sustained interest rate hike, especially as markets look ahead to the upcoming US inflation report. After starting the week on a downward trajectory, gold prices fell to lows not seen since March 10 and bottomed in the 1857.63 range. On Friday, gold prices corrected and traded at 1872.00.
Reinforcing this bearish sentiment is the strong performance of the dollar and 10-year Treasury bond yields, which are posting their best quarters in four years. The gold market is reacting to signals from the Federal Reserve regarding long-term rate stability. Comments from FRB Richmond President Thomas Barkin further cloud the outlook by introducing uncertainty about upcoming monetary policy adjustments. While recent data suggests solid economic growth in the U.S., financial players are preparing for the release of the Fed's inflation gauge, the August PCE Price Index. Three factors are needed for gold to move above the $1,900 level: a weaker dollar, lower bond yields and potentially disappointing inflation data. However, current market conditions cast doubt on the possibility of such a rally. 
Other factors providing some support for gold are concerns about a possible U.S. government shutdown on October 1 and continued instability in China's real estate market. Nevertheless, a significant rally in gold remains questionable, especially given the Fed's penchant for a hawkish stance, as evidenced by its recent hint at the possibility of a rate hike in 2023 due to persistent inflation. High inflation numbers coupled with U.S. economic activity could further reinforce expectations of a hawkish Fed stance.
With important data releases looming on the horizon, the assumption that the US Central Bank will maintain high interest rates is likely to drive US bond yields higher and strengthen the dollar. This strength is expected to hamper any significant recovery in gold prices, forcing investors to wait for definitive signs of buying momentum before considering that XAU/USD has reached a short-term bottom.
Technical analysis and scenarios:

The Alligator indicator with a wide open jaw indicates the prevailing bearish sentiment. The positioning of the jaw (blue line) over the lips and teeth (green and red lines) indicates that the instrument is in a downtrend. The AO and AC are both in green, indicating a bullish divergence. Such a divergence usually signals a potential bullish reversal, indicating the need to open a buy position. 
Main scenario (SELL)
Recommended entry level: 1865.00.
Take Profit: 1855.00.
Stop Loss: 1870.00.
 
Alternative scenario (BUY)
Recommended entry level: 1880.00.
Take profit: 1885.00.
Stop loss: 1878.00.