CaptainJack_Gold

🚀Gold 4-hour Trend Mainly SHORT On Tuesday, March 5th, as market expectations for the Federal Reserve's first interest rate cut in June grew stronger, gold prices surged to historic highs. According to the CME Fed Watch tool, traders estimated a probability of over 50% for the Federal Reserve to begin cutting interest rates in June. This potential move could boost demand for non-yielding gold. As of the time of writing, gold rose to $2130.06 per ounce, marking a significant increase of 0.74%. Intraday, it reached a high of $2141.82, breaking the previous all-time high set on December 4th at $2135.39. Over the past five trading days, gold has seen an increase of nearly $100, driven by expectations of monetary easing, geopolitical tensions, and the risk of a stock market pullback. The recent magnitude of the price surge has surprised some market observers, who suggest that momentum may be a contributing factor. The recent rally also highlights the growing decoupling between spot prices and outflows from exchange-traded funds (ETFs) supporting gold. Data compiled by Bloomberg indicates that the holdings of the world's largest gold ETF, SPDR Gold Shares, fell by 0.3% on Monday, reaching the lowest level since July 2019. These outflows have been partially offset by sustained demand for precious metals from central banks, even amid last year's surge in real interest rates, contributing to the upward pressure on gold prices. In the first few months of this year, gold has played an elevated role as a safe-haven asset, emphasized by increased geopolitical risks such as attacks on Red Sea shipping, suggesting escalating tensions in the Middle East. However, it's worth noting that as of March 4th, the holdings of the world's largest gold-listed exchange-traded fund, SPDR Gold Trust, have declined by 10% compared to the previous year. Last Friday, weak US manufacturing data led to an increase in the perceived risk of a stock market correction, which may have convinced some investors to shift from stocks to gold. Despite the uncertainty surrounding the timing of the Federal Reserve's policy shift, signs since mid-February indicate that such a shift is gradually approaching. The forward market suggests a close to 60% probability of an interest rate cut in June, higher than the beginning of the previous month. The reduction in borrowing costs is generally favorable for gold, given its non-interest-bearing nature. This uncertainty has led some analysts to question the sustainability of gold's recent sharp increase. Gold Technical Analysis: Gold experienced a bullish surge, rallying to 2141 after a intraday pullback to 2110 without breaking. The bullish momentum undoubtedly brought about a volatile move of over 30 points. However, despite the bullish outlook, there is a tendency to pin hopes on a bearish breakout. After all, even though the bulls achieved a significant climb to 2141 in 2024, marking an impressive gain of nearly 120 points, the fact that the peak is at 2144 makes it challenging for me to overly favor a bullish stance on gold. Furthermore, the current market sentiment heavily favors the bulls, and in the event of a bearish retreat, the potential for a substantial market collapse is considerable. This is why I choose to initiate short positions on rallies, rather than chasing breakouts to the upside. Even in cases where breakouts are pursued, I consistently advise everyone to set up well-placed reversal short orders as a precaution against potential bearish retracements. This precautionary measure is aimed at guarding against a potential downturn in bearish momentum. Gold rose on the positive news of the US February ISM Non-Manufacturing PMI and a favorable increase in the January Factory Orders month-over-month. However, despite these positive developments, gold failed to break through to new highs. It quickly approached its peak but fell back without reaching historical highs, making achieving new records seem like a temporary regret. The rapid ascent of gold did not result in surpassing historical highs; instead, it quickly retraced, indicating short-term pressure. Gold displayed a long upper shadow on the 4-hour chart, suggesting the possibility of a short-term peak. It is advisable to refrain from chasing long positions for now, as there is still a chance for gold to exhibit a bearish trend in the short term, possibly forming a double top pattern. Market conditions are ever-changing, and we never adopt a rigid bullish or bearish stance. Given that gold failed to break through historical highs, we take a direct bearish approach. The hourly chart shows gold repeatedly surging and falling, accompanied by long upper shadows, signifying weakening upward momentum. As gold did not achieve new historical highs and formed a double top, we continue with our bearish stance. In this historic moment for gold, the failure to break through to new highs signals a bearish outlook. Considering these factors, today's short-term gold trading strategy suggests focusing on short positions on rebounds, with long positions on pullbacks as a secondary consideration. The short-term key resistance levels to watch are 2138-2141, while key support levels on the downside are 2088-2065. It is crucial to stay in tune with the market rhythm, control positions, set strict stop-loss orders, and avoid stubbornly holding onto positions. Given the recent market volatility, opportunities and risks coexist, emphasizing the need to manage risks while pursuing potential gains. Gold Trading Strategies Reference: Strategy 1: Short Gold on Rebound near 2132-2135, with a stop loss of 6 points. Target the range of 2110-2100, and consider a break below for a target around 2088. Strategy 2: Go Long on Gold on Pullback around 2088-2090, with a stop loss of 6 points. Aim for the range of 2100-2105, and consider a break above for a target around 2110. These strategies provide potential entry and exit points along with risk management measures. It's important to stay vigilant about market conditions and be prepared to adjust the strategies based on real-time developments.