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Short Covering Will Continue Until Selling Levels Are Reached
Summary:
Gold prices were pressured by liquidity selling and fluctuating inflation expectations, but the medium- to long-term upward trend remains intact. The market is currently repricing inflation, interest rate paths, economic growth, and the liquidity environment.
Buy
TradingXAUUSD
EXP
4425.07
Entry Price
5200.00
TP
4170.00
SL
4405.37 -0.98 -0.02%
0
Point
Flat
4170.00
SL
CLOSING
4425.07
Entry Price
5200.00
TP
Fundamentals
Recently, due to geopolitical disturbances, gold prices have become significantly more volatile, and there has been a temporary misalignment between market risk aversion and macro pricing logic.
From a driving framework perspective, gold price movements can be broken down into two levels: Long-term logic: U.S. fiscal deficit expansion → government debt accumulation → monetary and credit pressure. Short-term variables: Monetary policy path → changes in real interest rates → market liquidity conditions.
The primary catalyst for this round of gold price declines was the U.S.-Israel-Iran conflict, which drove up international oil prices and caused previously easing inflation expectations to resurface. The fluctuating inflation outlook has prompted the market to reassess monetary policy, and has even led to temporary pricing in of expectations that the Federal Reserve may resume interest rate hikes in 2026.
This shift has had two direct consequences: expectations of monetary easing have subsided, leading to an upward revision of the interest rate path; and liquidity has tightened, triggering pressure from forced selling. Therefore, the pullback in gold prices is essentially a liquidity-driven price reassessment, rather than a shift to a bearish trend.
Technical Analysis
From a medium- to long-term perspective, the core underlying logic remains solid: geopolitical conflicts are more likely to evolve into protracted standoffs rather than come to a swift conclusion. U.S. debt pressures are mounting further amid the conflict and fiscal expansion. Caught between high interest rates and rising debt costs, the Federal Reserve will find it difficult to maintain a tight monetary policy over the long term.
Given the policy trade-offs, monetary policy is likely to remain accommodative to ease the interest burden and support key industries (such as AI), and further rate cuts cannot be ruled out. Our conclusion is that short-term disruptions do not alter the long-term logic of credit expansion, and we remain bullish on gold over the medium to long term.
Trading Recommendations
Trading Direction: Buy
Entry Price: 4379
Target Price: 5200
Stop Loss: 4170
Valid Until: April 23, 2026 23:55
Support: 4385, 4306, 4325
Resistance: 4511, 4602, 4739
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