On November 13, gold prices experienced a rapid plunge over the past two days, successively breaking through key support levels below and continuing a pattern of sharp drops from highs.
The core reason behind this was not a sudden negative development in the market, but rather changes in monetary policy expectations driven by U.S. inflation data.
The latest U.S. CPI inflation figures remain elevated, further demonstrating that inflation is highly sticky and unlikely to decline quickly.
This prompted the market to completely overturn its previous easing expectations and begin anticipating that the Federal Reserve will very likely raise rates again in December, with even the possibility of a significant hike.
As a result, the U.S. dollar continued to strengthen and Treasury yields surged higher. Since gold is a non-interest-bearing asset, the cost of holding gold soared, causing substantial capital outflows from the gold market and continuously driving prices lower.
However, after this wave of declines, all the recent bearish factors have begun to settle.
Although expectations for a December rate hike continue to heat up and keep pressuring gold's rebound, we also need to be wary of the risks behind this cascading sell-off.
After all, looking back at the earlier declines, even after the previous rate hike was announced, gold did not fall further into a deep slump, indicating that the medium- to long-term bullish resilience in gold prices still exists.
This is especially true after such a significant drop, when the market's broader direction places more emphasis on bullish profits.
Whether it is the continued severity of the Middle East situation or persistently elevated inflation, what comes next is simply further escalation — but that escalation may also be reaching its limit.
Once either of these two factors shows a favorable turn, it is hard to say how gold prices might rebound again.
For now, in the short term, we can also begin considering positioning for long trades at lower levels, doing while watching how market fundamentals develop.
If no new fundamental developments emerge, short-term price action may continue oscillating back and forth at low levels, and we can continue following the market to capture profits from both long and short positions within a small range.
But once a fundamental development suddenly emerges, we can also respond with appropriate strategies in mind.
From a technical perspective, on the daily chart, the price previously broke directly below the important psychological and structural level of 4000, so this level has temporarily transformed from former support into a strong resistance zone for bulls and bears to battle over.
On the 4-hour chart, the Bollinger Bands are opening downward, with the candlesticks continuing to run along the lower band. The MACD green bars are expanding, indicating that bearish momentum has been fully released.
Now, shorter-timeframe indicators have also entered oversold territory, so the market is highly prone to a technical rebound and correction after this sharp decline.
However, we cannot yet fully confirm a trend reversal, because as the price has successively broken through various levels, the resistance at each level above can only be fully confirmed as broken once gold prices push further through them, determining whether bulls can gain strong momentum.
Regarding key resistance levels above, the first resistance is currently in the 3925-3930 range, followed by 3950-3980 above, which is also the dense short-selling area formed during yesterday's pressured decline.
Only when this zone is broken can we temporarily conclude that short positions below have been gradually liquidated.
The further core strong resistance above is the 4000 level that has already been lost. Only when prices重新 stabilize above 4000 will the daily bearish structure ease and the bullish trend gradually gain trust.
As for short-term support below, the first support remains around 3870-3880, which is still the current short-term strength divider.
If this low is effectively broken again, then 3852 below will likely fail to hold either, since 3852 was merely a new low refreshed by the bearish continuation last night, not a key support level.
If it breaks again, it means the bearish move is not over, and the next strong support would only be around 3820-3800. However, without stronger bearish expectations ahead, this level may be somewhat difficult to reach.
For today's short-term trading reference: now that the short term has already rebounded, during the day we can first consider looking for a rebound from support around 3905-3910. The key is whether this rebound can continue.
On the upside, first watch whether the 3930 level can be broken. If broken, then look further at the key 3950-3980 high resistance zone, which is the critical fork for bulls. A direct break above 3980 would easily take prices above the 4000 level; failure to break would mean continued weak oscillation below 4000.
For subsequent short-entry levels, these are also relatively clear. First, watch the primary resistance at 3930 — if it cannot be broken, feel free to go short with a stop-loss at 3938. On the downside, continue watching support around 3880-3900, which is also a suitable level to consider going long again.
Whether going long or short, always set a stop-loss, since no one knows when the market will suddenly see new fundamental developments.
But no matter how fundamentals shift, as long as we are mentally prepared, short-term trading will be handled with ease.
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