Gold Price Drops Through Key Support Zone as Rate Hike Expectations Rise

Gold futures experienced a sharp decline after reaching an intraday high of $4,755. The price fell through both the Weekly and Daily Volatility Confluence PMI means, indicating a shift in technical structure to short-term bearish/mean-reversion mode.

The critical support levels are at $4,432 and $4,454, which represent the most important cluster zone. If this zone fails, the next downside objectives would be at $4,378 and $4,333.

The recent decline was triggered by a sharp repricing of Federal Reserve expectations following Chair Kevin Warsh's comments. Reuters reported gold falling roughly 3% as traders increased expectations for a September rate hike.

However, the longer-term backdrop remains more constructive due to concerns surrounding growing Treasury supply, fiscal deficits, and diversification away from dollar exposure.