Zong Xiaoli: Gold prices surged and then retreated again. What is happening in the market?

Yesterday’s market action is something everyone believes you’ve already seen: gold surged rapidly to the upside in the early session—strong momentum, very aggressive, giving the impression of bullish strength. This will make many people come up with the idea that gold will rise again and that they need to jump in right away to buy; but interestingly, after entering the European and U.S. sessions, the gold price kept slipping little by little. It’s completely unable to find that same upbeat momentum from the early session, leaving people feeling helpless and at a loss. Many people compare and can’t understand why gold is so weak—so what’s behind it?

In fact, the reason is very simple: no one is willing to take the call, and no one is willing to keep buying gold. If that’s the case, you can’t push the gold price higher; instead, quite a few people keep exiting the market, causing the gold price to fall continuously—so much so that it produces this strange pattern of a big first rally followed by a slow decline… And this situation kept going until today’s noon. The market finally couldn’t hold it in anymore, and a larger force suddenly pulled out, leading to a sudden sharp drop in the gold price—though it shocked quite a few people.

From this trend, the market now has less and less confidence in gold trending higher. At the same time, the number of people looking for ways to exit is increasing. This is clearly unfavorable for gold—so it’s also reasonable that the gold price continues to trend lower.

So where does gold go from here in the next move? Xiao Li believes it’s not ruled out that the market will continue to show a slow pullback until it finds a reasonable support level, at which point the decline in the gold price will temporarily come to an end. So tonight, during the late session, everyone needs to observe carefully: to what level will the gold price pull back? What price will become an effective support? If support shows up, then look for an opportunity to go short-term long again—just remember not to be greedy. Take a bite and that’s enough. Everything, be careful~