The gold market in this run of trading really lives up to the old saying: “Cut firewood for a thousand days, burn it all in one day.” After the price had been consolidating at high levels around 4166 for so long, the long side’s hard-earned cushion was finally crushed by that recent big bearish candle, and in just one day it fell back to where things stood before—back to square one.

This morning, gold was trading weakly and ranging around 4030, and any rebound was extremely feeble. The root cause is that a sharp surge in oil prices sparked strong rate-hike expectations; U.S. Treasury yields then surged higher, directly draining the safe-haven funds from gold. On top of that, the large amount of profitable long positions that had built up earlier at high levels rushed to exit all at once, resulting in a stampede-style drop.

From a technical perspective, below, 4000 is the final line of defense at the round-number level. Once it breaks, price may probe further downward. The situation right now is very dangerous—don’t think that after it has already fallen a lot, you should go bargain-hunting at the bottom. This “fire” is still blowing out smoke and ash.

In terms of execution, consider 4040–4050 to go long on pullbacks, with a target of 4000. If it breaks down further, continue to watch 3980. $XAU