Gold fell below the $1,870 key technical support level, which leaves the door open for even more declines.

The recent convincing drop below $1,900, after trading sideways for most of the year thanks to repeated dip-buying, has very much been driven by the Federal Reserve's statements it will keep policy tight for a long period.

Continued firm US economic data and a surge in crude oil prices have made the Fed's hawkish narrative very credible, which could see the FOMC dot projections come true.

The Fed's higher rates for longer narrative, fear that surging energy costs will leak into core inflation and a resilient US economy are prompting us to worry that there is still more downside.