Qin's Jinsheng: Gold Price Rebound and Recovery - Analysis of Gold Market Trends and Trading Recommendations

On March 20th, the global gold market is experiencing a dramatic “seven consecutive declines” disaster. On Thursday (March 19), spot gold prices plummeted by 3.5%, closing at $4,650 per ounce, with intraday drops exceeding 6%, hitting the lowest point since early February at $4,503.18 per ounce. On Friday (March 20) morning in the Asian market, spot gold slightly rebounded and is currently trading around $4,687 per ounce.

News analysis: After yesterday’s sharp plunge, gold prices entered a weak consolidation and correction phase today. But remember, this is only a technical rebound after a crash, not a trend reversal. The bearish dominance remains unchanged. The core reason for yesterday’s steep decline was the unexpectedly hawkish signals from the Federal Reserve’s March FOMC meeting, which is the main factor currently driving gold prices. As a zero-interest asset, gold’s holding costs have risen sharply, combined with previous large gains leading to profit-taking, triggered stop-losses, and multiple factors resonating, causing yesterday’s big drop.

On the other hand, the strong momentum of the US dollar and US Treasury yields continues, with funds flowing out of gold into dollar assets, further weakening gold’s support. Additionally, the Middle East situation, although escalating, has not triggered safe-haven demand—in fact, it has pushed up international oil prices, heightening inflation concerns and supporting the Federal Reserve to maintain high interest rates. This creates a reverse logic of “rising oil prices, falling gold,” which everyone must recognize and avoid blindly relying on geopolitical safe-haven plays for bottom fishing. Moreover, the world’s largest gold ETF continues to reduce holdings, indicating significant capital outflows and confirming the current weak pattern in gold.

Technical analysis: Daily chart: Yesterday closed with a large bearish candle, breaking through all key support levels. Although there was a slight rebound today, the moving average system remains a classic bearish arrangement, with the 5-day, 10-day, and 20-day moving averages all trending downward, and prices staying below these averages, indicating weak rebound momentum. Regarding indicators, the MACD green bars have shrunk but are still diverging downward, suggesting short-term relief rather than exhaustion of bearish momentum. The KDJ indicator shows a slight turn at low levels but remains within oversold territory, and in a one-sided bear market, oversold conditions can become dull and are not reliable trend reversal signals—only short-term warning signs. Key support levels today are the rebound at $4,638 and the below $4,600 round number. These are short-term critical supports; if broken, prices will continue to decline. Resistance is focused on the $4,750–$4,800 zone, which was a previous key support turned resistance, making it a significant hurdle for any upward move.

Four-hour chart: After the plunge, gold entered a low-range consolidation phase, showing a pattern of “higher lows in rebounds.” Clearly, the bearish trend remains unchanged; the consolidation is just building momentum for further decline. The short-term trading range is set between $4,638 and $4,700, with relatively balanced bulls and bears within this zone, but overall still dominated by bears. If prices break above $4,700, a short-term rebound toward $4,750 is possible; but if they fall below $4,638, the next target is $4,600 or lower.

Hourly chart: Although there was a slight rebound in the morning, volume was insufficient, and the rebound lacked sustainability, typical of weak correction. Short-term support is at $4,650–$4,660; if prices fall back into this range, a brief stabilization may occur. Short-term resistance is at $4,700–$4,720; approaching this zone, bearish pressure is likely to dominate, making further gains difficult. Overall, the key trading principle today is to follow the bearish trend, participate cautiously in rebounds, avoid blindly bottom fishing, refrain from chasing longs, and strictly control positions and stop-losses—this is the bottom line I always emphasize.

Specific trading suggestions:

• Short positions: Follow the trend. When prices rebound to the $4,700–$4,720 zone, consider shorting with a stop-loss above $4,750 (above strong resistance). Target the $4,650–$4,638 range. If prices break below $4,638 and stabilize, continue shorting with a target near $4,600, and exit promptly after taking profits—avoid holding shorts blindly.

• Long positions: Quick in and out. Only when gold revisits the $4,638–$4,650 zone and shows clear signs of stabilization (such as bullish engulfing at lows or volume-supported stabilization) can a small long position be attempted with a stop-loss below $4,620 (below key support). Target around $4,700, and exit immediately after profits are realized. Do not chase the rebound or hold on to it, to avoid being trapped by the bearish trend.

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