Zong Xiaoli: Gold is stuck in a consolidation. What are the underlying reasons, and can it break out into a new trend?

Last Friday, gold showed a choppy upward move, largely in line with expectations. The daily candle closed as a strong bullish day (a mid-to-large green candle), basically engulfing the previous day’s mid-bearish candle. With this back-and-forth, gold once again went on a roller-coaster ride…

After the weekend pause and reset, it’s clear that the gold price suddenly fell into a period of consolidation. In the morning session, it first dropped and then rose, forming a V-shaped pattern, which directly disrupted many people’s trading rhythms and left quite a few investors dizzy and disoriented. This shows that gold has already fallen into consolidation, and within a short time, it will be difficult to pull out a sustained trend—there’s a certain level of challenge!

So why has gold slipped into consolidation? The fundamental reason is that the situation in the Middle East remains tense and unresolved. Last Friday, there seemed to be some easing in the Middle East situation—between the U.S. and Iran, it looked like they were exchanging signals and even intending to negotiate. But after developments over the weekend, this matter fell apart immediately; it was announced that negotiations between the U.S. and Iran are almost impossible. Therefore, the Middle East situation can only remain chaotic, which will continue to generate various impacts on gold, leaving gold unable to rebound effectively or plunge decisively…

How should we look at today’s gold price action? Chua Li believes that today’s gold is likely to remain in consolidation. Opening up an effective trade within a short period is relatively difficult, especially since the Middle East situation is heating up, which will not be beneficial for gold—instead, it will act as a drag. Therefore, today’s gold is very likely to keep ranging. In terms of trading, just look for opportunities to sell at higher levels and buy at lower levels when the timing is right. Resistance to watch is around 4555 and 4602, while support is in the 4410–4418 range, for reference~