Zong Xiaoli: Gold suddenly plunges sharply. What is the cause? Is this a buying opportunity?

Gold dropped sharply in today’s early trading session out of the blue. I believe everyone has seen it. This sudden drop completely disrupted many plans. Quite a number of people suffered heavily in this round of sell-off, and some were simply shaken out of their positions—leaving everyone extremely annoyed!

As for the reason, it appears to be directly related to the “old man Trump” speech. People in the market say that although Trump’s speech was meant to emphasize ending the war, it also carried an implication that the intensity would be increased in the next step. That implication immediately made the market worry, which in turn triggered a sharp drop in gold. Well… this explanation seems reasonable on the surface, but in reality it’s quite far-fetched, because it directly negates the prior logic behind gold’s rise. Previously, whenever war broke out, it was just rise after rise—gold kept going up. But now it’s only suggesting an upgrade in intensity, and yet gold gets scared and plunges violently. Honestly, that’s pretty amazing. Does it mean the logic for gold’s upside and downside has already changed—changed completely from before?

For this question, we currently can’t provide an answer; only time will tell. But no matter what, gold has indeed put in a down move, and the力度 (magnitude) isn’t small. So in the next step, we must pay close attention to how gold pulls back: how much will it retrace? After the need for pullback has been fully released, and once the price retraces to a reasonable level, then we can consider getting in at the right time…

So for now, we still can’t make an exact judgment on gold. We’ll have to patiently keep watching. Only after confirming that a bottom in gold has been formed can we consider entering and getting on the trade—remember this, everyone!

As for the U.S. dollar index, tonight the key is to watch exactly how much it can rise, because that will affect the entry and exit of dollar liquidity. It’s relatively important, so don’t take it lightly!