On May 18, international gold prices entered a phase of heightened volatility, with a single-day decline at one point exceeding the $100 mark, leading to a pronounced divergence in market views on the short-term direction. Analysts suggest that the simultaneous pressure from a stronger US dollar, rising US Treasury yields, and increasing real interest rates forms the core macroeconomic backdrop for the precious metal's retreat from recent highs. Further pressure on short-term prices came from profit-taking actions by institutional investors. The rapid shift between bullish and bearish forces has notably intensified market caution.
From a geopolitical perspective, the tense situation in Iran and rising crude oil prices have prompted the market to re-evaluate inflation expectations. Several investment banks have analyzed that this round of adjustment in gold prices represents a phase of redistribution of market positions. The long-term trend of central bank gold purchases has not changed. The short-term portfolio adjustments by institutions reflect more of a risk management action rather than a fundamental negation of the trend. The long-term allocation rationale has not weakened, with structural buying interest still waiting for opportunities to build positions.
On the technical front, the $4,500 level is widely viewed by the market as a key battleground for bulls and bears. Strategists emphasize that the ability to hold this support level will determine the medium-term directional choice, with some long-term capital preferring to enter the market in stages during pullbacks. Multiple institutions have indicated that the timing of moves is more important than the absolute price level, and that aggressively chasing short-term rebounds is inadvisable. A rational response is superior to emotional trading.
At the operational level, investors are reminded to exercise restraint in position sizing and avoid making aggressive adjustments during periods of extreme sentiment. It is anticipated that gold prices will continue to test direction around key support levels while awaiting new catalysts. The rational application of range-based strategies coupled with strict risk control constitutes a prudent approach in the current high-volatility environment, helping to avoid unnecessary losses. Staggered entry strategies are more conducive to long-term participation.
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