Mindset and technical skills go hand in hand: A look at gold markets and trading strategies next week

In the spot investment market, mentality is often more important than technology. Many people lose money not because they misjudge the market direction, but because they are unable to maintain their positions, cannot tolerate market fluctuations, and cannot use stop loss orders. The market is always changing and the only thing you can control is your discipline and your emotions.

Recent market dynamics: Long and short factors conflict with each other, gold falls into a state of volatility

Judging from this week’s performance, speculators’ positions showed obvious differentiation. The net long position in crude oil in the energy sector has increased sharply, while the situation in precious metals is not optimistic. The net long position in gold and silver has decreased at the same time, indicating that funds are withdrawing from safe-haven assets.

Gold has performed relatively poorly this week despite continued tensions in the Middle East and rising geopolitical risks. What’s the reason? The main reason is that the market is once again betting on the possibility of the Federal Reserve raising interest rates.

Rising U.S. Treasury bond yields, coupled with rising oil prices raising inflation expectations, have put tremendous pressure on gold prices, which once fell to a three-week low. At the same time, although the US-Iran negotiations have given some positive indicators, major differences still exist, and the market remains highly vigilant about global inflation and interest rate expectations.

Fed Policy Outlook: Gold is in a critical situation
Gold is currently facing difficulties; on the one hand, geopolitical risks provide support; on the other hand, oil prices, the US dollar and interest rate expectations are negatively affected, limiting the possibility of its short-term recovery.

The Fed’s hawkish outlook has become gold’s biggest obstacle. Traders have increased bets on the possibility of the Federal Reserve raising interest rates before the end of the year as rising oil prices stoked concerns about global inflation.

Recent comments from Fed Governor Waller deserve careful attention. He said the Fed should not consider cutting interest rates as a default option as inflation risks rise. Last January he supported lowering interest rates. “If inflation does not subside quickly, I cannot rule out the possibility of raising interest rates in the future,” Waller said bluntly. He now believes the Fed should make it clear that the next interest rate adjustment may be a cut or a hike.

This represents a critical shift in direction. In addition, the University of Michigan’s consumer confidence index fell to 44.8 from 48.2, while one-year and five-year inflation expectations rose, indicating that consumers’ concerns about future price pressures continue to increase.

Technical analysis: Slight weakness, bearish strategy remains.

Weekly Chart: Gold maintained a limited trading range this week, ending the week with a bearish doji candlestick pattern. This pattern indicates uncertainty in the short term, but the overall trading strategy remains bearish from a long-term perspective.

Daily Chart: A lower close on Friday points to weaker short-term trends. A slight decline is likely to continue next Monday. Short-term resistance is located near 4540.

4-hour chart: The trading strategy for next Monday is very clear – focus on selling on highs. Keep an eye on the resistance between 4530-4535; if price rises into this area and encounters resistance, consider selling short. The first support level to watch is 4480.

The main resistance level is around 4550-4560, and strong resistance is in the 4580-4585 area. Support levels are located at 4480, 4450 and 4400.

IMPORTANT NOTE: Next week, beware of possible reversals and rebounds after a second dip without breaking support. Judging from next week’s close, the market may be slightly bearish and range-bound. In the absence of any unexpected news, a significant unilateral rise or fall is unlikely.

Gold trading strategy for next Monday

Sales strategy (main strategy):

Sell ​​gold in batches at the 4530-4540 level, with a position size of 20%.

Place a stop loss order above 4560 points.

Target the 4500-4450 area; a break above this level could lead to 4400.

Buying Strategy (Secondary Strategy):

Buy gold in batches at 4400-4410, with the position size also being 20%.

Place a stop loss order below the 4380 level.

Target area 4450-4480; a break above this level could lead to 4500.

Risk warning: Carefully control position size and set stop loss orders for all transactions. Be wary of violent market fluctuations caused by emergencies. News is often unreliable. As individual investors, we only have access to indirect information, even from unreliable sources. Pay attention, but don’t worry too much, otherwise you can easily be misled. Observe more, act less and avoid hasty decisions – this is the best strategy to survive in this market.

Honest advice on falling into a loss trap

If you are currently holding a severely losing position, consider the following factors:

First, if you are trapped too tightly, it means you are going against the trend and refusing to admit your mistakes even in a one-sided market. Instead of recklessly waiting for price reversal, bearing a large holding cost every day, and worrying about the risk of margin calls, it is better to resolutely stop losses and free up funds to start over. This is no joke; some trend-following trades may cover your losses, so there’s no need to stubbornly hold on.

Secondly, if you’re not too stuck. If you fall into a loss trap after triggering a few pips of stop loss levels, it will be easier to handle. One-way market fluctuations rarely occur, and short-term fluctuations are more common. You can find a relatively suitable entry point to close the position, and maybe even turn a loss into a profit.

Third, if you repeatedly fall into the loss trap, this is not a problem with the market, but a fundamental problem with your trading method. The market is fair and every loss has a reason. The ideal solution is to learn basic analytical skills.

The market is full of opportunities, but it lacks traders with impulse control and discipline. I wish you all steady progress and a successful week.

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