Gold Sinks Below Key Support Levels as Rate Hike Odds Soar
Gold futures plummeted on Tuesday, suffering their second $120+ decline in six days. The COMEX December contracts (GCZ2026) dropped $126 or 2.9% to settle near $4,252 an ounce.
The metal broke below several key technical support levels, including the 0.236 Fibonacci retracement level at $4,425.7 and two widely watched moving averages: the medium-term 100-day (~$4,455) and long-term 200-day (~$4,639) simple moving averages.
The decline was sparked by renewed hawkishness from Federal Reserve Chair Kevin Warsh, who reiterated that the central bank still has 'work to do' in bringing inflation back to target. This sent traders repricing odds of a rate increase at this month's Fed meeting, with CME Group's FedWatch tool showing roughly two-thirds probability, up from under 40% just last week.
Higher rates make gold less attractive as an investment, and the shift in expectations overrode the metal's usual safe-haven appeal despite simmering geopolitical tensions. Rising Treasury yields also pulled capital away from bullion and into rate-sensitive assets.