A weekly bullish candle silenced all the bears' arguments.

​For four consecutive weeks, gold plummeted from 4400 to 3946. It fell every week, and every week people said it would continue next week. Then in the fifth week, the non-farm payrolls surprise came in, with only 57k jobs added. The expectation of a rate hike was instantly released, and gold surged $240 in five days, using one weekly bullish candle to end four consecutive weeks of decline with a period.
​But Uncle Li wants to make it clear: ending four consecutive declines does not mean starting four consecutive rises.
​The engine of this weekly bullish candle is short covering, not new long positions. What does that mean? It means that the shorts who overbet on rate hikes were caught off guard by the non-farm payrolls, and a stampede of position closures pushed up gold prices. This kind of rebound is characterized by a fierce start but subsequent weakness. Once shorts are all closed, who will continue buying?
​The answer lies in two aspects. First, look at the CPI in mid-July. If inflation continues to stick above 4%, the expectation of rate hikes may make a comeback at any time, and shorts will return to the table. Second, see if 4180 can hold. This is a resistance level that has suppressed rebounds many times before. If it can firmly turn into support, then 4300 will be within range. If it cannot hold, it will be destined for range-bound oscillation.