On Tuesday, Comex February gold futures surged 6.1% to settle at $4,903.70 per ounce, marking the largest single-day dollar gain on record and the best single-day percentage gain since March 19, 2009. This dramatic rebound was triggered by dip-buying activity after gold prices had plummeted by a cumulative 13% over the preceding two trading sessions. Some analysts suggest the price recovery reinforces the view that recent selling pressure stemmed more from short-term speculative positioning and momentum trading rather than a fundamental shift in market dynamics. Analysts at Sucden Financial noted in a report, "Prices had previously climbed far beyond levels typically justified by pure safe-haven demand linked to geopolitical or macroeconomic uncertainty. Consequently, this pullback appears less about fading uncertainty and more about the unwinding of excessive positions." Following the sharp decline last Friday, several asset managers had already speculated that the sell-off was not purely a reflection of weakening fundamentals but rather a reassessment of "concentration risk." Katie Stofberg, an Investment Manager at Mattioli Woods, pointed out that just as AI and tech stocks experienced severe volatility due to extreme crowding, gold had also become overloaded with capital and narrative. When everyone is positioned on the same side, even quality assets are susceptible to violent selling during deleveraging. Some institutions believe the rally towards the $5,000 mark had been too smooth, lacking necessary corrections and turnover. Tom Meadows, Investment Director at BRI Wealth Management, noted that while the persistent weakness of the U.S. dollar had provided significant support for gold prices, the greenback has recently shown signs of stabilization. Furthermore, although central bank purchases remain a crucial long-term pillar for gold, this supportive force has moderated in recent months. Many market participants argue that despite the correction, gold's fundamental thesis remains intact, as structural drivers—including elevated geopolitical risks, macroeconomic uncertainty, inflows for asset diversification, and ongoing central bank buying—continue to hold firm. Joni Teves, a strategist at UBS, stated in a report, "We view this pullback as healthy for the market over the long term. This phase should offer investors an opportunity to build long-term strategic positions at more attractive entry levels." However, some analysts urge caution. Rania Gule, Senior Market Analyst at XS.com, warned that the recovery of some recent losses is "fragile," as it is not built on fundamental changes in monetary policy or the global risk landscape but rather stems from "a temporary pause in dollar strength, not a sustained weakening." Quek Ser Leang from UOB's Global Economics & Markets Research team indicated in a report that technical indicators suggest gold's recent strong upward momentum may have temporarily eased. He noted that spot gold broke below its 55-day exponential moving average on Monday for the first time since August 2025, a technical signal that often implies the current uptrend may be entering a pause.
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