Wu Di and other analysts jointly warn: Gold price volatility intensifies, making it difficult to determine the bullish or bearish trend

London Gold Market Recently Experiences Sharp Fluctuations

In late January, gold prices ranged widely between $5,019.85 and $5,595.32 per ounce, then sharply retraced to close at $4,891.54 per ounce. This market movement has sparked widespread discussion about the future direction of precious metals. Independent analyst Wu Di believes that the current volatility masks a complex situation with both bullish and bearish forces intertwined, and investors should focus on key levels.

Trump’s New Policies Shake Gold Prices, $5,056 Becomes the Bull-Bear Divide

Fundamentally, Trump’s appointment of Kevin Waugh as Federal Reserve Chair has triggered a new round of market re-pricing of the dollar. Wu Di points out that Waugh is committed to shrinking the Fed’s balance sheet, which contrasts sharply with prior expectations of dollar depreciation, thereby bursting some of the gold price bubbles supported by a weaker dollar.

According to Wu Di’s technical analysis framework, $5,056 per ounce is the critical dividing line between bullish and bearish sentiment. When prices are below this level, it indicates that bears have the upper hand. Since late January, international gold prices have entered a bearish pattern, and further downside cannot be ruled out.

Wu Di further analyzes key support and resistance levels. Strong support is near $4,517 per ounce; if this level is broken, the next support zone shifts to $4,143. On the upside, a successful break above $5,056 could ease the current downward pressure.

Macro Support vs. Technical Correction: What’s Next for Gold and Silver?

Contrasting Wu Di’s cautious stance, independent analyst Zhou Zhicheng believes that although short-term volatility is intense, the macro fundamentals supporting gold remain solid. Data from U.S. banks show the dollar has fallen 12% since Trump’s second term began, a decline driven by policy direction rather than chance.

Despite the Fed holding rates steady in January, Powell claimed inflation would subside by mid-year, and with slow deterioration in U.S. employment, expectations of rate cuts persist, providing a fundamental support for gold. Zhou Zhicheng also notes that rising geopolitical tensions in the Middle East could serve as a catalyst for a second rebound in gold prices.

On the technical side, international gold faces multiple support and resistance zones. Key resistance levels are at $4,950, $5,190, and $5,350 per ounce, while support levels are at $4,740, $4,620, and $4,540. Due to several U.S. employment data releases this week, gold and silver prices may continue to exhibit volatile and disorderly swings.

Diverging Institutional Views: Is a Critical Turning Point Near?

Li Yuefeng, researcher at Beijing Gold Economic Development Research Center, compiled outlooks from major international institutions. Deutsche Bank is bullish, targeting $6,000 per ounce and potentially challenging $6,900; Royal Bank of Canada sees room for further gains, possibly reaching $7,100 by year-end; Societe Generale expects prices to rise to $6,000; Morgan Stanley is optimistic about reaching $5,700. These optimistic forecasts present an interesting contrast.

Notably, Citibank has sharply raised its three-month international silver price forecast from $100 to $150 per ounce, while Saxo Bank notes that after entering the “three-figure” era, international spot silver may enter uncharted territory. This suggests that the precious metals market may be brewing larger uncertainties.

Li Yuefeng mentions that high-frequency data reflect changing speculative sentiment. Chicago Mercantile Exchange (CME) gold open interest has dropped sharply by 110,300 contracts to 428,864, and CFTC data show that speculative bullish sentiment on precious metals has cooled, with net long positions in the three major metals reduced. This cooling sentiment correlates with previous price surges.

Short-term Correction Still Needed; Investors Should Watch for Three Major Risks

Zhaojin Refining’s Liu Shikai adopts a more cautious view. He believes that short-term bullish sentiment may be undermined, as technical indicators show that after overbought conditions, a correction is still necessary. He expects gold and silver prices to consolidate in a volatile correction, with further downside possible.

Liu Shikai highlights key support zones between $4,440 and $4,200 per ounce. A decisive break below this range could lead to deeper adjustments. Resistance is at around $4,680, which is critical for a short-term rebound.

Based on multiple analysts’ perspectives, investors should be alert to three major risks: First, Trump’s new policies may support the dollar more than expected, putting downward pressure on gold; Second, if Fed rate cut expectations fall short, gold’s fundamental support could weaken; Third, technical overbought conditions may evolve into larger corrections.

This week’s rate decisions from the Reserve Bank of Australia, European Central Bank, and Bank of England, along with U.S. non-farm payroll and employment data, will be key factors influencing short-term trends. In this context, Wu Di and other analysts generally advise investors to remain cautious, set stop-losses at key levels, and guard against sharp volatility.