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Gold is experiencing a classic inflationary reversal
“Yesterday we discussed buying hedging, and today the price of gold fell 100 points. Have you experienced violent fluctuations in the gold market?”
“Many people wonder why the price of gold falls during a time of war?”
“The basic logic is simple: Oil prices rise → Inflation concerns intensify → Fed rate cut expectations decrease → The U.S. dollar strengthens → Gold prices come under pressure.”
“This is a classic case of inflation reversal, a scenario that will repeat itself in the early stages of the Russia-Ukraine conflict in 2022.”
“The market is always a dynamic game. Only by understanding the flow of funds behind it can we stay calm amid fluctuations.”
If you agree with my point of view, please follow my institutional analysis of the market.
Support level:
First support level: $5100-5110
The second strongest support level: $5000-5020
Resistance levels:
First resistance level: $5150-5200
Strong Resistance: Around $5,250
As shown in the picture:
I have pinpointed the two most likely trading ranges:
The first trading range: 5000-5150 US dollars
Second trading range: $5150-5250
These two ranges will be our preferred trading ranges for day trading.
Our strategy will also adjust based on the support and resistance levels within these two ranges.
Logic 1: Interest rate cut expectations are reversed, the US dollar appreciates, short-term bearish forces prevail, and a rebound will provide opportunities for short positions.
Specific strategies:
(1) If the gold price rebounds to the $5140-5150 range and begins to show signs of recession, it is recommended to open a small selling position.
Stop Loss: Set at $5,180 to allow enough margin to rebound and avoid exiting the trade.
Targets: The first target is around $5,100; if this target is exceeded, the next target is $5,020.
Price: $5140-5150
Stop loss: $5230-5240
Take Profit: 5150-5100-5020 USD
(2) Short-term bullish strategy based on key support levels
Logic: After the rapid decline in gold prices, there may be a technical rebound at key psychological levels.
Purchase price: 5050-5080
Take profit price: 5140-5150
Stop loss price: 5010-5020
Control transaction size: Due to the current high market volatility, it is necessary to reduce the size of each transaction.
Accurately determine stop loss: Stop loss should be set on every trade to avoid extreme market conditions causing huge losses.
Pay attention to the news: Pay close attention to the latest developments in the situation between the United States and Iran, as well as the expected U.S. non-farm employment data this week.
The price of gold suddenly fell by hundreds of points. I know many of you are seeing your accounts drop significantly and are probably panicking. But I want to emphasize that this historical volatility is part of the nature of the market. Especially in times like these, it is crucial to remain calm and thoughtful:
Is my initial entry logic still valid?
Can my trade withstand this pressure?
Remember, we should not be panicked small investors, but rational investors.
If you feel confused and hesitant, follow me and share your investments in the comment area; let’s analyze it together.
