Friends, today's gold $XAU plunge has really scared a lot of people. Watching the gold price tumble from its peak, dropping over 5% in a day, the entire precious metals sector is in the red. Friends holding long positions are probably feeling their heart racing, and those who haven't entered the market are also in a dilemma: is this the end of the bull market, or just a 'golden pit' in the middle?
As a long-term market watcher, I would like to share my honest views. This sharp decline actually had early warnings.
First of all, the winds have really changed. A few days ago, Federal Reserve Chairman Powell clearly stated that if inflation doesn't cool down, there will be no interest rate cuts. This directly extinguished the market's fantasy of rate cuts in March. It's important to know that the previous surge in gold was driven by everyone's bet that the Fed would lower rates early. Now that those expectations are dashed, the dollar and U.S. Treasuries are more attractive, and non-yielding gold is naturally being sold off. This is the fundamental reason.
Secondly, the rise is too much and too fast. This year, gold has skyrocketed, repeatedly hitting historical highs. The short-term increase is astonishing, and technically it has long been "overbought." Institutions and smart money have already made a fortune, and once they sense the wind is not right, they will surely rush to cash in. This has triggered a chain of stop-losses for leveraged funds, leading to sell-offs, and it’s not surprising to see prices drop by hundreds of dollars in half an hour.
Furthermore, risk aversion sentiment is also cooling down. Some previous geopolitical risk events supported gold prices, but now these factors have eased somewhat, causing funds to naturally flow toward risk assets, temporarily weakening gold’s "safe haven" halo.
Some may ask: Why did international gold prices plummet, but domestic gold store prices hardly changed? This is mainly supported by strong domestic physical demand and channel premiums. It’s normal for the futures market and physical market to be temporarily disconnected; there’s no need for excessive interpretation.
So, the most critical question arises: Has the gold bull market ended?
My core view is: No.
This feels more like a violent "purging" during a bull market, aimed at washing out the indecisive high-flying chips, rather than a reversal of the trend. The long-term logic supporting gold has not disappeared: global central banks are still continuously buying gold, deep reforms in the monetary system, and a long-term downtrend in real interest rates... all of these still persist.
However, in the short term, growing pains are inevitable. The market needs time to digest and oscillate, and it’s highly likely to be pulled back and forth within a range (for example, corresponding to important support and resistance levels of international gold prices) without immediately reversing sharply.
Finally, here are a few heartfelt suggestions for everyone:
· For friends holding physical gold: Stay calm; for things that are long-term allocations, don’t be scared by short-term fluctuations. If you want to add to your position, remember "buy in batches, buy in batches, and buy in batches again," don’t go all in at once.
· For friends engaging in leveraged trading (futures, T+D, etc.): Risk management is the lifeline! Be sure to trade lightly; the current market is killing both bulls and bears, so avoid blindly bottom-fishing or shorting. Focus on observing key support levels; if they break, act decisively, and don’t stubbornly hold on.
· For friends still observing from the sidelines: Patience is the best virtue. Don’t rush to "pick up bargains;" it’s much more prudent to wait for market sentiment to stabilize and trends to become clearer before taking action, rather than rushing in now to "gamble."
In summary, the biggest taboo in investing is chasing highs and killing lows. No matter how good a bull market is, there will be pullbacks. This recent crash serves as a vivid lesson in risk education. Put aside panic, and don’t be greedy; maintain patience, so we can respond to market changes more calmly.
In the medium to long term, I still have a favorable outlook on the allure of gold. After passing through this period of oscillation, the future remains promising. Currently, stabilizing one’s mindset and controlling actions is the best strategy.