Yesterday, gold started a unilateral decline from the high of 4549, dropping over 240 points in one go. All previous support levels were broken, and the bearish momentum was quite strong. By this morning, although spot gold stopped its plunge, there were no signs of a strong rebound. It was only consolidating slightly in the range of 4339 to 4365, with the rebound strength remaining quite weak. From the 1-hour K-line chart, the low point of 4303 touched yesterday became a key support level. The oscillation and rebound in the early trading session failed to break through the resistance above this range.

Why is gold so weak? On one hand, the US Q4 economic data performed quite strongly, significantly cooling market expectations for the Fed to continue cutting interest rates. On the other hand, the US dollar index rose accordingly, coupled with a rebound in global risk appetite, leading to a large amount of safe-haven funds withdrawing from gold. This created a dual suppression on gold prices.

What’s the outlook? Based on the current trend, the strength of the gold rebound is still insufficient to change the downward main tone, so the bears will continue to dominate the market in the afternoon. Those rebound opportunities are basically good chances to short.

From a technical perspective, it is recommended to establish short positions around 4375 to 4385. If the price rebounds to near 4390, consider adding to the position. The first target is 4350, and the second target is further down to 4340.