Brothers, take a look at the gold price over the past 48 hours. On Tuesday, the CPI came out at 3.8%, the highest in three years. On Wednesday, the PPI came out at 6.0%, exceeding expectations by 1.1 percentage points. The probability of a rate hike jumped from 0 to 36%, while the probability of a rate cut crashed from 80% to 3%. If you measure the scale of the data from these two days with missiles, it’s like two missiles exploding in the market back to back.

Now look at gold: Tuesday at 4690, today at 4692. After those two missiles exploded, how much did the gold price move? A few dollars—what is the concept of a few dollars? The spare change from buying a pack of cigarettes is more than this. Two missiles’ worth of movement is less than the change you’d have from a pack of cigarettes. Is this normal? It’s not normal at all. Either it should surge wildly or plunge sharply—how could it stay completely motionless?

I’m telling you, this isn’t because the market is reacting slowly, and it’s not because the data isn’t important. It’s because two opposing forces—bulls and bears—are perfectly canceling each other out at the 4690 price level. Imagine a tug-of-war with 100 people on each side. The force on the left is 10,000 kilograms, and the force on the right is also 10,000 kilograms. The red rope in the middle doesn’t move—not because there’s no force. Quite the opposite: both sides are using all their strength. It’s just that the forces are exactly equal, so it looks like nothing is happening.

4690 is that red rope in the middle. What is pulling on the left? Inflation pressure. With CPI3.8% hitting a year high and PPI6.0% coming in double expectations, pressure inside the inflation “pipeline” is increasing rapidly. If inflation rises, gold—an anti-inflation asset—should rise too. This force probably applies an upward pull of about 80 to 100 dollars to the gold price.

What is pulling on the right? It’s the interest-rate force. CPI beating expectations means the Fed can’t cut rates. The rate-hike probability surged to 36%. The 10-year US Treasury yield also hit 4.48%, a new within-year high. When interest rates are high, the opportunity cost of holding gold rises, and funds run toward Treasuries. This force probably applies a downward pull of about 80 to 100 dollars to the gold price.

So these two forces are achieving a perfect dynamic balance exactly at 4690. What you’re seeing isn’t calm—it’s two massive forces straining against each other. The rope is already stretched so tight it’s almost snapping, but the red rope just won’t move. But this balance has a fatal weakness: it’s extremely fragile.

When the two sides pull with 10,000 kilograms each, the rope doesn’t move. But if suddenly the left side gets one extra person, turning it into 10,100 kilograms, the rope won’t drift slowly. It will snap sharply toward the left, because the potential energy from the previously suppressed 10,000 kilograms will be released in an instant. In financial markets, this phenomenon is called the “spring effect.” In an extremely balanced state, any tiny incremental increase in force can trigger a massive swing far larger than its own size.

Under a $2 bottleneck, there is $200 worth of potential energy. What force will break this balance? What person will be that extra person in the tug-of-war? I’ll give you a specific time point—remember, tomorrow, May 15. Wosh will officially take over as Fed Chair, as reported by CCTV News. Why can Wosh’s arrival break the balance? Because after taking office, he must do one thing: tell the market his view of the current economic situation and his policy preference.

He could choose not to say anything, but not speaking is itself a stance. The market will interpret it as evasion, and confidence will deteriorate further. If he does speak, he has to choose a priority between inflation and economic growth. If he chooses inflation, it’s hawkish—meaning the likelihood of rate hikes increases, the interest-rate force strengthens, the rope rebounds to the right, and the gold price falls. If he chooses growth, it’s dovish—meaning the likelihood of rate cuts returns, inflation pressure strengthens, the rope tilts to the left, and the gold price rises.

No matter which side he picks, it will break the 4690 balance—and once it’s broken, the volatility will be very large. Because the spring has been compressed for two days, the potential energy has already been fully stored. Historically, every time a new Fed Chair takes office, the market’s volatility during the first week increases sharply.

In 1987, when Greenspan took office, the US stock market crashed in the first week—20%, a Black Monday. In 2006, when Trank took office, bond market volatility surged by 1 times. In 2014, when Yellen held her first press conference, gold’s single-day volatility was 40 dollars. In 2018, when Powell took office, in the first month the stock market saw a 10% pullback. Every handover of power leads the market to reprice aggressively through a period of intense volatility.

Wosh’s policy preference won’t be an exception. And this time the background is even more complicated than before: inflation is 3.8% and accelerating, PPI is 6.0%, the economy is slowing with GDP only 1.24%, the Fed is torn internally 8 to 4—3 votes for a rate hike and 1 vote for a rate cut. The Strait is still in chaos, and oil prices are still above 100. Wosh is taking over not a normal Fed, but a messy situation squeezed from both inflation and recession pressures, with serious internal divisions.

In this context, whatever he says first will trigger a fierce repricing in the market. So the period for keeping this zero-sum force at 4690 is now less than 24 hours. The moment Wosh officially takes office tomorrow is like the instant an extra person suddenly appears on the rope. I don’t know which way it will snap, but I can estimate the snap’s magnitude. The potential energy accumulated over two days, plus the premium effect of the leadership transition, plus the lagged digestion of CPI and PPI—during the first wave, the movement could be roughly 80 to 150 dollars.

That means tomorrow, the gold price could make one large directional move between 4540 and 4840. You don’t need to guess the direction in advance—you just need to know the movement will definitely happen, and the magnitude will definitely not be small. This false calm won’t last long—it's about to end!

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