February 2: In the gold market last week, after recording a historic surge, international gold experienced a historic plunge, ultimately forming a long upper shadow inverted hammer candlestick pattern. For the outlook, this suggests expectations of another phase of peak adjustment and a trend of several weeks of sideways consolidation. However, the overall bull market trend remains valid, and from a current perspective, each phase of adjustment still presents another entry opportunity.
Specifically, the price of gold opened higher at $5005.58 per ounce at the beginning of the week and continued to climb consecutively. After further reaching the weekly high of $5595.97 on Thursday, it experienced a sharp sell-off followed by volatile fluctuations. By Friday, it displayed an epic plunge, not only erasing the week's gains but also falling further to the weekly low of $4588.52. It eventually saw some volatile recovery, closing at $4860.31. Compared to the previous week's close of $4982.08, the weekly amplitude was $613.89, with a closing decline of $121.77, a drop of 2.44%.
The influencing factors included renewed escalation of geopolitical uncertainties, market concerns about a potential US government shutdown before the end of January, additional tariff threats from Trump targeting countries like Canada and South Korea, and further comments on the US dollar, all of which initially helped push gold prices higher to challenge historical highs. However, as geopolitical tensions eased somewhat, the Federal Reserve decided to keep interest rates unchanged, and Chair Powell did not mention rate cuts, hinting that no cuts were likely before May. Additionally, consecutive sharp declines in the US stock market triggered profit-taking in precious metals to cover losses. Meanwhile, following the rapid surge, substantial leveraged funds triggered automated algorithmic profit-taking, leading to a chain reaction of selling worth $38 billion within half an hour. The Chicago Mercantile Exchange (CME) continued to raise margin requirements, and the Shanghai Futures Exchange simultaneously restricted new position openings. Forced liquidations of highly leveraged long positions exacerbated the liquidity crisis, further amplifying the decline, ultimately leading to a lower close.
Looking ahead to this Monday (February 2): International gold opened in the Asian session with a gap down of approximately $35 to $4825.84. It initially rose to fill the gap but then turned lower and fluctuated. Pressure from Friday's sharp decline, combined with Trump's nomination of Kevin Warsh for the next Fed Chair, which significantly strengthened the US dollar, and Trump's current expressed desire to reach agreements with countries like Cuba and Iran, further diminished gold's safe-haven demand, pressuring prices to open lower and weaken.
During the day, attention will be on data such as the US S&P Global Manufacturing PMI Final for January and the US ISM Manufacturing PMI for January. Market expectations lean towards being negative for gold prices. Furthermore, heavyweight data including non-farm payrolls will be released this week, with overall expectations being mixed. Therefore, the data is unlikely to provide strong support for gold prices, leading to a greater probability of sideways movement or continued decline this week.
Fundamentally, last week's escalation in geopolitical tensions and tariff threats pushed gold prices as expected into the target zone of $5500-$6000. However, as the supportive factors generally weakened, increased margin requirements and trading restrictions across platforms, coupled with the stock market crash, created a liquidity crisis forcing profit-taking and position liquidation, leading to consecutive sharp declines. Currently, with the easing of geopolitical tensions and the expectation that the Fed will find it difficult to cut rates in the first half of the year, gold prices will struggle to strengthen again in H1 this year, at least before March.
Nevertheless, this sharp decline is still viewed more as a correction within a bull market. Referring to historical patterns in recent years, each consecutive rally has been followed by a significant retracement and a period of sideways adjustment. While the magnitude is larger this time, the pattern of maintaining a bullish outlook for the bull market remains unchanged. Overall, the core supportive logic for this gold bull run has not been shaken. Expectations for Fed rate cuts within the year still exist. Although geopolitical tensions have eased, historical experience from the past decade suggests that such calm is often temporary. Additionally, the long-term trend of central bank gold buying continues unabated. After another thorough consolidation, gold prices still possess significant upside potential for the remainder of the year.
Technically, on the monthly chart, although gold experienced a significant retracement in January, it retained nearly half of its gains. The price action remains above the breakout trendline and within the new bull market space. Therefore, even if prices move lower again, they are expected to consolidate above the trendline support around $4300 before resuming their upward trajectory. On the weekly chart, gold prices rallied outside the Bollinger Bands as anticipated last week and then underwent a corrective pullback. The formation of a long upper shadow inverted hammer candlestick pattern indicates a bearish top signal, which will exert further downward pressure this week and beyond. If this week sees a bottoming rebound or a recovery reclaiming most of the decline, bullish momentum could be reignited. Key focus is on the trendline level established after the breakout earlier this year.
On the daily chart, gold prices extended Thursday's bearish top formation lower on Friday, intensifying the decline. Currently, they have found some support near the 30-day moving average and the support zone of the previous upward channel. However, bears still hold some advantage; until prices stabilize back above the 5-day moving average, the trend favors consolidation. For potential phased entries, watch for support tests at the 30-day or 60-day moving averages before considering new positions.
For real-time intraday trading guidance, follow live account information. Preliminary intraday operation level ideas are for reference; specific entry/exit points are subject to real-time account notifications: Gold: Support levels to watch are around $4650 or $4545; Resistance levels are around $4920 or $5100. Silver: Support levels to watch are around $77.60 or $69.50; Resistance levels are around $88.15 or $94.00.
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