Gold prices staged a "roller coaster" performance, but gold bulls welcome the pullback
On Tuesday, international gold prices experienced significant fluctuations, peaking at $3,512 per ounce before falling back to $3,321.49 per ounce, with an intraday decline of nearly 2%. Market analysis indicates that technical overbought conditions and positive signals from the Trump administration regarding the trade war are the main reasons. Analysts believe there is strong support in the $3,350-$3,370 per ounce range, and any pullback presents a good opportunity for medium to long-term entry. Gold prices have risen 26% this year, benefiting from the stalemate in trade negotiations, global economic slowdown, and the Federal Reserve's policy maneuvering. Future volatility may become the norm, and attention should be paid to liquidity risks
According to the Zhitong Finance APP, on Tuesday, international gold prices experienced a dramatic reversal, with spot gold reaching a historical high of $3,512 per ounce during the day, followed by a "V-shaped" decline. As of the time of writing, it was reported at $3,321.49 per ounce, down nearly 6% from the day's high, with a daily decline of nearly 2%. Market participants pointed out that a wave of profit-taking triggered by technical overbought conditions, combined with positive signals from the Trump administration regarding the trade war, became the main drivers of this sharp drop.
Liu Shiyao, a futures analyst at Zijin Tianfeng, believes that there is strong support in the current range of $3,350-$3,370 per ounce, stating that "any pullback is a good opportunity to enter the market for the medium to long term." This year, gold prices have risen by 26% cumulatively, mainly benefiting from three major supports: the deadlock in US-China trade negotiations, expectations of a slowdown in global economic growth, and the subtle game between the Federal Reserve's monetary policy and the Trump administration. Among them, the continuous purchase of gold by global central banks and the record high ETF holdings have provided a solid backing for gold prices.
In addition, regarding the future trend of gold, analysts believe that volatility may become the norm. First, the uncertainty of the US tariff policy still exists; second, although the dollar has rebounded, selling dollar assets may also occur during the rebound, as US credit has indeed been damaged in this round of tariff wars. The futures company Chaos Tiancheng believes that the risk of a gold bull market lies in liquidity.
In the short term, first, a reversal of speculative positions may occur: according to monitoring by the China Gold Association, the ratio of circulating/actual consumption demand for gold has reached a certain peak, and a large number of speculative positions could trigger concentrated selling risks; second, the market's expectations for the Federal Reserve's interest rate cuts are overly optimistic, thus ignoring potential liquidity risks; third, valuations have become overstated, with gold-silver, gold-copper, and gold-oil ratios reaching crisis levels, but the crisis has not yet appeared.
A notable turning point occurred on Tuesday Eastern Time when Trump suddenly announced the abandonment of plans to remove Federal Reserve Chairman Powell and released optimistic expectations for a US-China trade agreement, causing risk aversion sentiment to rapidly cool. Technically, the RSI indicator reached the overbought zone of 80, triggering a surge in programmatic selling, leading to a technical plunge in gold futures contracts.
The precious metals market showed a differentiated trend: after a decline of over 1% in silver prices in the morning, a rebound occurred, while platinum and palladium saw slight gains, indicating that expectations for industrial metal demand still provide support. The Bloomberg Dollar Spot Index remained basically flat