Gold Consolidation Continues After Hawkish Fed Signals Fuel Biggest Daily Loss Since June
Gold remains under pressure on Monday, though the recent selloff appears to be stabilizing around the $4,400 area, where Fibonacci 38.2% retracement support of the $3,942 to $4,697 rally converges with the 20-day moving average. The metal is consolidating after Friday’s sharp 3.2% decline, its steepest one-day drop since June 10.
The precious metal came under heavy selling pressure following hawkish remarks from Fed Chair Kevin Warsh at the Jackson Hole Symposium, which reinforced expectations of another U.S. rate hike and boosted the U.S. dollar.
Adding to the bearish backdrop, renewed tensions in the Middle East emerged over the weekend as the United States and Iran exchanged strikes after a relatively calm period. The escalation has revived concerns over inflation and geopolitical uncertainty, potentially clouding the near-term outlook for gold.
From a technical perspective, a potential reversal pattern is taking shape on the daily chart after gold posted its first weekly loss following three consecutive weeks of gains. However, a decisive break below the recently breached $4,400 support zone is needed to confirm a more bearish scenario and rule out the possibility that the latest decline is merely a healthy correction within the broader $3,942 to $4,697 uptrend.
That said, daily momentum indicators remain broadly constructive, while the stochastic oscillator is approaching oversold territory. Moving averages continue to deliver mixed signals, suggesting that downside momentum may face additional resistance.
Market participants will closely monitor the $4,400 level, followed by support at the 100-day moving average near $4,370. A sustained break below these levels could further weaken the near-term technical structure and increase the risk of deeper losses.
On the upside, a recovery and close above the 200-day moving average at $4,327 would improve sentiment, signal the formation of a higher low, and potentially pave the way for a renewed bullish phase.
Res: 4510; 4527; 4575; 4600
Sup: 4400; 4370; 4329; 4304
