On February 2nd, gold plunged late last Thursday, tumbling nearly $400. Although it subsequently found a bottom and rebounded, briefly recouping the earlier losses, the substantial recent gains had accumulated a massive amount of profit-taking positions. The market's decision to take profits triggered a chain reaction, intensifying short-term selling pressure. After opening last Friday, gold continued to face pressure and moved lower, with the further decline resembling an avalanche; the lower it fell, the more it seemed destined to drop. This downtrend persisted into this Monday, with the price hitting a low of $4,402, representing a drop of nearly $1,200 from the recent high over three trading sessions and nearly erasing all gains from the past month.
During this sharp decline, gold repeatedly attracted bargain-hunting buyers, supporting staged rebounds with single-session rallies as high as $200 to $300. However, in the midst of the avalanche, after rapid rebounds, the price soon set new, steeper lows. Most recently, gold rebounded from an intraday low of $4,402 to encounter resistance at $4,733; it is now trading slightly lower around $4,677, which has temporarily alleviated some of the immediate downward pressure.
Wolfinance star analysts believe that gold's surge of over $1,200 in the past month had built up significant profit-taking positions. Rising market risk aversion, which boosted safe-haven buying, was a key driver of the rally. However, the situation has changed in recent days. Firstly, Trump's nomination of Warsh (a moderate hawk) for Fed Chair alleviated market concerns about the Federal Reserve's independence and cooled expectations for previously anticipated aggressive easing policies. Secondly, geopolitical risks have de-escalated, including resumed US-Venezuela negotiations, eased US-Iran tensions (with Trump signaling a cooling-off by stating serious talks are underway with Iran), and trilateral US-Russia-Ukraine talks. Rising market expectations for peace have dampened safe-haven demand. These factors prompted market participants to take profits, and the resulting heavy selling triggered follow-on selling, leading to a sharp short-term decline in gold prices.
On the daily chart, gold has fallen sharply for three consecutive trading days, with the short-term decline at one point approaching $1,200, indicating significant weakness. Key support levels to watch are around $4,550, which was the historical high from December and the breakout level from January's upward surge, followed by the round-number level near the recent low around $4,400. Resistance above can be seen near the 4-hour MA5 around $4,735, where today's rebound from the lows has temporarily stalled. A break above this level would bring the focus to the area near the daily Bollinger Band midline around the $4,800 round figure; stabilizing above this point could allow for further rebounds, with initial upside targets near the daily 10-day MA around $5,000. The 5-day MA golden cross is turning down, the MACD indicator is beginning to form a death cross, and both the KDJ and RSI indicators are showing death crosses pointing downward, suggesting that from a technical perspective, gold still faces near-term correction pressure.
Intraday Gold Reference: Cooling risk aversion has triggered profit-taking, with heavy follow-on selling amplifying the downward pressure and causing a sharp short-term decline in gold prices. Trading strategy suggests adopting a range-trading approach. Support below is seen around $4,550, followed by $4,400. Resistance above is focused around $4,735, then $4,800. A sustained break above these resistance levels could lead to further rebounds, with upside targets initially around $5,000.
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