The New Zealanders were red-carded for having an illegal bike on the start line ahead of their bronze decider against Canada.
Wales were promoted into New Zealand's place.
More details are emerging but it's a bad blow for the team of Regan Gough, Campbell Stewart, Nick Kergozou, Tom Sexton and Jared Gray.
Meanwhile, the women's team will race for the gold medal in their event, after qualifying as the second fastest team.
In the first women's pursuit event to be held at a Commonwealth Games, the Kiwis will take on Australia later tonight, with a medal guaranteed.
The spot in the finals came down to the wire, with Canada falling 0.1sec outside of the time posted by the Kiwis. Canada will meet England in the ride off for the bronze medal.
Wales opened qualifying with a respectable time over a shade over 4min24sec. They were followed by South Africa and India, who finished slower.
All three missed out on spots in the medal races.
Australia lit up the track, posting a time of 4min17.218sec, a Games record, and were over five seconds head of the Kiwis.
The New Zealand team followed Australia, and never looked like matching them. However, they were able to post a good time to beat out the Welsh quartet.
After that, it was a waiting game - with capable teams from England and Canada to ride. However, neither could knock off the Kiwis, who are guaranteed a medal.
The gold medal race will be run at 9:37pm tonight.
