Gold is experiencing wild volatility: Fundamentals battle hard and key technical support levels are tested 🎢

Spot gold prices continued to fluctuate sharply during the Asian and European trading hours on Friday (January 30), with widespread selling occurring for the second consecutive day. It is currently trading at about $5,195 per ounce, down about 3.4% on the day. The price of gold has hit a record high since the beginning of this month, with an increase of more than 25%, and has repeatedly hit record highs in the past two weeks. However, the market conditions yesterday (January 29) were really amazing. The price of gold once rose to a record high of US$5,596.33, and then fell to around US$5,097. The single-day price range exceeded US$500, setting a rare fluctuation record in recent years! 😱

🔍 A fierce battle between fundamental bullish and bearish factors
Negative pressure:

Government funding deal supports dollar 🇺🇸: U.S. Democrats and the White House reached an agreement on temporary funding for the Department of Homeland Security, and the dollar strengthened on optimism that a government shutdown can be avoided. The U.S. dollar index rose slightly to around 96.50, putting pressure on gold priced in U.S. dollars.

Strong profit-taking tendency 💸: The excessive rapid rise in gold prices prompted traders to take profits near historical highs, leading to technical selling.

Supporting factors:

Concerns about Fed policy and independence ⚖️: Trump again criticized the Fed and called for sharp interest rate cuts. Although the Federal Reserve has kept interest rates unchanged for the time being, the market is concerned about political interference in monetary policy. The low interest rate environment provides long-term support for gold.

Geopolitical risks still exist 🌍: The United States is strengthening its military presence in the Middle East, there are still fundamental differences in the peace talks between Russia and Ukraine, and uncertain factors such as Trump’s threat to impose tariffs on Canada continue to increase the demand for safe havens.

Economic and Inflation Data 📊: The market is focused on U.S. Producer Price Index data and speeches from Federal Reserve officials later in the day, which will affect the performance of the U.S. dollar and thus gold price fluctuations.

Technical Analysis 📉: Major trend lines become lifelines for bullish and bearish investors

From a technical chart perspective, gold prices are going through a critical phase:

The 4-hour chart shows a bearish signal 📉: the MACD range has expanded negatively, and the relative strength index (RSI) has fallen below the 50 midline, indicating increased short-term downward pressure.

Key Uptrend Line ⚠️: The uptrend line formed from the $4,670 low currently provides support near $5,070. If this support holds, gold prices may resume their rebound; however, a close below this level could open the way for a sharp decline, which could lead to a test of the $4,990-$5,000 area.

Yesterday’s moves reveal key levels 🔑: Gold prices found buying support near $5,160 after a sharp decline and bounced back near $160, indicating buying pressure in this area. First resistance is currently located at $5,245; a rebound to this level may represent a shorting opportunity. The main support is in the $4990-5000 range.

🎯 Market overview and trading strategies

Gold is currently in a high consolidation stage after experiencing a sharp rise. Fundamental news is mixed, along with a technical test of key support levels. Especially today, Friday, caution is advised due to increased volatility and the possibility of another price decline towards the end of the trading day.

Trading advice:

If the price rebounds to around $5,245, it is recommended to open a small sell position and set a stop loss order at the previous high, targeting the $5,000 area.

If the price falls directly below the trendline support at $5,070, a position can be opened following the rebound, targeting the support area between $4,990 and $5,000.

It is not recommended to randomly enter a position on a dip; wait until the price settles above major support levels and shows signs of stabilization.

Important reminder: The current market is highly volatile; therefore, it is recommended to place a larger stop loss order, and position management is crucial! Short-term market sentiment affects market trends; therefore, it is recommended to respond flexibly based on news developments.

Has gold peaked? The market has yet to give a clear answer. In an environment where volatility has increased significantly, investors should remain cautious and wait patiently for the market to clear! ⚠️💡

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