After breaking out of a Falling Wedge pattern (see our note from July 22), Gold rallied 15% and tagged a three-month high near $4,700 last week.
Now gold has pulled back roughly 5%, slipping back toward the $4,350 support zone. The move looks more like a healthy correction than a trend reversal — here's what drove it and where things could go from here.
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Source: altFINS expert trade setups
What triggered the pullback
The catalyst was a shift in Fed rate expectations. In his Jackson Hole address, new Fed Chair Kevin Warsh struck a hawkish tone, warning that inflation isn't meaningfully cooling and reaffirming a "firm and fixed" 2% target.
Markets responded by pricing in around a 57% chance of a 25-basis-point Fed rate hike in September, up sharply from roughly 40% a week earlier. Higher-for-longer rates lift the opportunity cost of holding non-yielding gold.
A firmer dollar and rising oil prices added pressure. Gold also remained pressured by rising oil prices after the US military targeted Iranian rocket launchers preparing to deploy mines into the Strait of Hormuz.
Worth noting: the preceding rally wasn't primarily an ETF-inflow story. The August surge traced largely to the U.S. Treasury doubling its long-bond buyback capacity after a weak 20-year auction, stoking currency-debasement concerns — the so-called "debasement trade." So this pullback is partly the market cooling off from that fiscal-driven spike.
The technical picture
Price is sitting right on the $4,350 support after failing near the $4,550 resistance. Immediate levels to watch:
Support: $4,350, then $4,200
Resistance: $4,550, then $4,800
The 200 SMA (~$4,511) is now acting as overhead resistance — reclaiming it would be an early bullish signal.
Outlook scenarios
Bullish (buy-the-dip) case: The longer-term uptrend stays intact. UBS is expecting gold to reach $5,400 over the next 12 months, supported by dollar diversification, renewed ETF inflows and central-bank buying.
A hold above $4,350 and reclaim of the 200 SMA / $4,550 reopens $4,800. Structural central-bank demand and debasement concerns provide a floor.
Bearish (further correction) case: If the September rate-hike bet firms up and the dollar strengthens, a break below $4,350 opens $4,200 and potentially $3,960.
AI Trade Setup
Here’s what altFINS AI Trade Setup tool has generated for gold:
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We first shared this analysis in our VIP telegram group and our Technical Analysis section.
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