4.2 Why Did Gold Plunge 240 Points? Will Gold Continue to Rise During U.S. Trading Hours?

Yesterday, gold opened around 4671, then repeatedly fluctuated throughout the day, with the low reaching 4661, experiencing multiple rounds of ups and downs; during the European session, it continued to rise, then pulled back after U.S. data before strongly rebounding, hitting a high of 4792 at midnight, and finally closing at 4758. The daily increase was 130 points. Today, after opening higher near 4800, gold suddenly plunged, breaking through two key support levels at 4700 and 4600, with the lowest around 4553. The price fluctuated over 240 points, forming a massive long bearish candle, breaking below the 5-day moving average and testing the 10-day moving average. The previous bullish trend abruptly ended.

Core reasons for the plunge:

1. The geopolitical situation reversed sharply: signals of easing in Middle East conflicts led to a mass withdrawal of safe-haven funds, quickly erasing the gold safe-haven premium.

2. The Fed's rate cut expectations cooled: U.S. economic data exceeded expectations, significantly weakening market expectations for rate cuts. The dollar and U.S. bond yields rebounded strongly, increasing the opportunity cost of holding gold.

On the 4-hour chart, Bollinger Bands shifted from opening upward to downward, with prices moving along the lower band. MA5, MA10, and MA20 are arranged in a bearish order, turning downward. Prices are under downward pressure from the moving averages. After a death cross above the zero line on the MACD, the green bars continued to expand significantly. RSI dropped from overbought levels above 70 to below 40, entering a weak zone. The KDJ lines diverged downward toward oversold levels, with the J value bottoming out, indicating a slight rebound correction with limited upside potential.

On the 1-hour chart, MA5, MA10, and MA20 are fully in a bearish arrangement. MACD shows a low-level death cross with expanding green bars, and the two lines are flattening, indicating oversold rebound momentum. However, no golden cross has formed, so the rebound is limited and could quickly retest lower levels. RSI is currently between 30-40, in oversold correction, with occasional rebounds that are unlikely to change the overall weak trend. Resistance is at 4650-4680, support at 4550-4500. Overall, the bearish trend is confirmed, with the main downward wave ongoing. Rebounds are just a continuation of the decline, and the overall outlook remains bearish.

Gold Trading Strategy: Short in batches around 4640-4650 during rebounds, with a stop loss at 4670, targeting 4580-4550.

If it falls back to 4530-4540 and shows signs of stabilization (long lower shadow, small bullish candles), consider light long positions.

Disclaimer: The above content is for sharing personal ideas and opinions only and does not constitute trading advice.