See the gold price (XAUUSD) today after a sharp drop from the high of $5,600 down through $4,402. It has now rebounded to around $4,850, but it still looks like the problems are not over.

The main reasons the gold price has fallen sharply are two major issues. The first is that CME decided to increase Margin Requirements, causing highly leveraged speculators to throw in the towel and sell off in large numbers—especially Chinese traders, who lost more than 1,000 million yuan. The second is the nomination of Kevin Warsh as the new Fed Chair, a “hawk” who favors tightening the balance sheet and keeping interest rates at a high level. This news strengthened the US dollar, making gold feel uneasy.

Last night, the ISM Manufacturing PMI rose to 52.9%, far above expectations. This is the first expansion and reversal in several months. It signals that the US economy is still strong, giving the Fed an excuse not to rush into cutting interest rates—which is definitely bad news for gold.

From a technical perspective, gold plunged to test the 61.8% Fibonacci support at $4,536 and the psychological support at $4,425 before rebounding. RSI is rising out of oversold territory, indicating that selling pressure is starting to fade. Stoch RSI has also formed a Golden Cross in the lower zone, confirming that there is a chance of a short-term rebound.

But here’s the problem: if this rebound cannot move above $4,850 to $4,900, and is hammered back down, the price could fall to $4,540 or even as low as $4,248—an extremely deep zone.

One side of the story that could help gold is rising tensions in the Middle East. If a geopolitical event truly impacts geopolitical stability, gold may get another opportunity to rise and break above $5,000.

For trading today, if you’re a Scalping style trader, you may consider a short-term Buy as long as the price holds above $4,800, with profit targets at $4,850–$4,870. But you must set a tight Stop Loss quickly, because the primary trend is still bearish. If you’re a Swing Trade style trader, consider waiting for the price to form a Higher Low on the H1 or H4 chart first, since this rebound might only be a Dead Cat Bounce.

However, if you’re stuck at $5,200 and can’t take it anymore, cutting some losses when the price rebounds around $4,900 is a reasonable option. But if it’s “patient capital” and you don’t use Leverage, holding long positions to wait for the year-end target of $5,500–$5,800 is still possible, because US public debt is still a big ticking time bomb that hasn’t exploded yet.