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Gold Pullback May Not Be Over, Risk of a Double Bottom Test
Commodity
Summary:
Gold saw a sharp pullback yesterday, yet the overall uptrend remains intact. Traders are advised to wait for the end of the correction phase.
Sell
CLOSEDXAUUSD
End Time
4395.00
Entry Price
4295.00
TP
4450.00
SL
4319.61 -19.50 -0.45%
1976
Points
Profit
4295.00
TP
4375.24
CLOSING
4395.00
Entry Price
4450.00
SL
Fundamentals
Gold prices diverged at high levels during yesterday's session. In early trading, prices held firm at elevated levels, buoyed by sustained bets on the Fed's future rate-cut path as well as expectations of central bank and physical buying. However, gold subsequently retreated under the combined impact of exchange-level risk management moves and a short-term rebound in the US dollar.
The market's pricing of the Fed's 2026 rate cuts remains the core macro driver for gold: as long as the market expects the rate-cut cycle to persist, the decline in real interest rates will continue to boost gold's appeal. Conversely, any signal hinting at a slower pace of rate cuts will quickly curb gold prices.
Meanwhile, sudden changes in liquidity conditions and trading mechanisms amplified intraday volatility. The Chicago Mercantile Exchange (CME) recently raised margin requirements for precious metals futures to address extreme volatility. This move immediately squeezed leveraged capital and high-frequency positions after the market opened, triggering a rapid pullback in gold, silver and other precious metals futures. It was one of the direct triggers for yesterday's intraday decline.
In terms of capital flows: although gold ETFs have recorded continuous net inflows so far this year and central bank purchases remain robust (forming solid medium-to-long-term support), institutions were forced to adjust positions in the short term under the dual pressure of thin liquidity during the holiday window and margin hikes. This triggered a volume-light pullback, or a technical correction characterized by "rallying and then falling back". Monthly and quarterly flows of global gold ETFs still point to a solid bullish foundation, though short-term capital flows can reverse in an instant.
Technical Analysis
On the daily chart, gold opened higher but moved lower yesterday, with bears dominating intraday trading, leading to a single-day drop of over $200. Nevertheless, from the perspective of the overall trend, the moving average system still maintains a bullish alignment, indicating that the medium-to-long-term trend remains upward.
On the 4-hour chart, affected by the sentiment of yesterday's sharp decline, gold is experiencing a weak rebound intraday. There is a possibility of a secondary downward test in the short term. Traders should watch the primary support zone around 4300-4290 below and the immediate resistance range of 4400-4415 above.
Trade Recommendations
Trade Direction: Sell
Entry Price: 4395.00
Target Price: 4295.00
Stop Loss: 4450.00
Valid Until: 13 January, 2026, 23:00:00
Support: 4300.00/4290.00
Resistance Levels: 4400.00/4415.00
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