On February 2nd, gold and silver experienced a sharp sell-off characterized by panic-driven flight from elevated levels. Following a plunge of $500 on Thursday evening, gold plummeted nearly $800 on Friday. This massive dive in the gold market saw prices collapse from a high near $5,600 to $4,682 in just two trading sessions. Prior to this historic price crash, we had already warned of the risks for long positions, noting that when market sentiment becomes excessively bullish, a crisis often follows; market tops invariably emerge amidst extreme euphoria.
Following the sharp decline on Thursday evening, we indicated that a continued retreat was likely on Friday. Looking back at trends since 2026, nearly every Friday has been marked by either a retreat or a significant correction. Furthermore, as we emphasized, once market sentiment peaks and the frenzy among bulls subsides, it becomes an opportune time for distribution. At such moments, any sign of a pullback can trigger selling from long positions, and panic selling inevitably leads to a cascading, cliff-like decline!
In early trading today, gold again fluctuated by $300. The volatility in gold over recent days has been exceptionally high, with prices surging or plummeting dozens of dollars in seconds. Currently, our full focus and efforts are dedicated to our members. It is crucial for everyone to patiently await clear trading signals. In such market conditions, even correctly identifying the direction can be futile; being stopped out before a move continues—whether down or up—renders the analysis meaningless.
Gold has broken down decisively, continuing its descent after breaching last Friday's low of $4,682. We also stressed on Friday that panic selling would likely fuel further declines, particularly emphasizing that a break below the $4,682 low would almost certainly lead to a significant continuation of the downtrend. At the very least, a sharp, momentum-driven sell-off is expected in the short term. However, it is important to note that after a panic-driven sell-off, a sharp corrective rebound often follows. Short positions should not be held indefinitely; protective stops are essential, and profits should be taken promptly. Operationally, after the break of $4,682, short positions targeting $4,500 are advisable. If $4,500 is breached, continue shorting for a further $40, focusing on the $4,400 level!
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