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Geopolitical conflict rocks gold market: What happens after sudden collapse?

On Monday (May 11), financial markets once again experienced violent fluctuations: 💥The price of gold opened sharply lower, falling by about US$50 to US$4,670.26 per ounce; 🛢️Crude oil (West Texas Intermediate crude oil) opened sharply higher, up more than 3.66%, reaching US$98.85 per barrel.

On the surface, this looks like the “balancing” effect on asset prices caused by geopolitical conflicts; on a deeper level, it reflects the three-way interaction between global inflation expectations, dollar performance, and Fed policy expectations. 🤝

🧠First: Basics: three-way interaction of logic, short-term pressure, and long-term investment value

✅ Short-term stressors:

Rising oil prices push up inflation expectations ← The market is worried that the Federal Reserve will continue to raise interest rates or even delay cutting interest rates ← Support the US dollar ← Gold, which does not earn interest, faces holding cost pressure 📉

U.S. non-farm employment data in April exceeded expectations (115,000 new jobs, unemployment rate 4.3%) ← The labor market has become more elastic ← Expectations for a substantial interest rate cut this year have declined ❄️

Rising gasoline prices caused the consumer confidence index to fall to a historical low of 48.2 → High oil prices have a significant impact on the real economy

✅ Medium and long-term supporting factors:

If geopolitical disputes are not resolved quickly, high oil prices will continue to test the resilience of the global economy ← Safe-haven gold demand returns 🛡️

High global debt and central banks continue to buy gold←The strategic investment value of gold still exists🏦

If the ceasefire makes significant progress, oil prices fall, or the Federal Reserve sends a slight easing signal → gold recovery momentum is expected to return quickly 🚀

📌Key Points:

The current gold trading logic is closely related to the geopolitical situation:

➡️Oil prices fall, easing inflation concerns ➡️Interest rate cut expectations rise ← Support gold prices

➡️Oil prices are high and inflationary pressure is increasing → Interest rate cuts are not expected → Gold prices are under pressure

This week’s focus: US April CPI and PPI data will be key indicators of short-term trends 🌬️

📊2. Technical analysis: The price gap needs to be filled, and there is a downward trend in the short term, but the key support level is still held.

[Daily Chart Analysis]📆 Although it rose for four consecutive days last week, there was a correction after testing the 100-day moving average twice, and the upward momentum was weak📉

The momentum of red MACD is weakening, and KDJ forms a bearish cross at a high level → it is obviously a short-term correction.

Main resistance zone: 4750-4760. Failure to stay above this level will weaken buyers’ control.

Main support level: near 4600 points. A close above this support today could trigger a new downtrend.

[4-hour chart analysis]⏰ The bull-bear alternation of the Japanese candle chart shows the balance between buyers and sellers; the Bollinger Bands are narrowing, and the price is fluctuating near the middle band.

The 5/10 moving average is converging downwards, the MACD has formed a bearish cross in the overbought zone, and the green bars are growing → short-term downtrend.

1-hour chart analysis⏱️A short gap appeared this morning, and the gap was located at 4710-4715 (last Friday’s closing price).

Random shorting is not recommended until the gap is fully closed; watch for gap resistance on any rebound.

trading strategy

⚠️Control the size of the position, strictly abide by the stop loss order, and never hold a losing position.

The main strategy for the day: selling at high prices is the main strategy, and buying at low prices is secondary.

Short Selling Position Strategy:

When gold prices are under pressure, it is recommended to sell slightly near 4700.

🛑 Stop loss reference: above 4730 (to prevent covering the spread)

🎯 Login target: 4660 ← 4630 ← 4580

Main support area: 4600-4580

Main Resistance Zone: 4710-4720

If the spread closes quickly and the price stabilizes above 4720, the bearish logic should be re-evaluated and a range trading strategy should be adopted.

📌 Summary and highlights

🔸 The sudden plunge in gold prices is the result of a reversal of geopolitical expectations and consistent macroeconomic data.

🔸Short-term volatility has intensified, but the medium- and long-term logic still exists.

🔸 This week’s most important topics:

📍US CPI/Producer Price Index data

📍Follow-up data from the United States and Iran

📍Diplomatic progress between major powers

💬Do you think gold prices will maintain the $4,600 level this week? Do you still expect a drop, or are you prepared to buy at lower levels? Feel free to like 👍 and share your opinions in the comments!

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