GOLD – despite today’s sharp rebound, the downside remains highly exposed

Gold extended its steep decline, falling to a one-month low after Monday’s session opened with a roughly $100 gap down, indicating that negative sentiment from Friday’s largest daily drop in over forty years remains entrenched.

Easing tensions over Iran and early signs that the conflict in Ukraine could be moving toward a resolution added to selling pressure, with speculation that major market players were actively pushing the metal lower.

While these factors drove prices sharply down, the broader picture suggests this is still a healthy correction within the larger rally. Today’s low at $4,402 found support just above the 50% retracement of the $3,120–$5,598 range (May–January uptrend).

The strong rebound of about $300 from the $4,402 low signals renewed buying interest. A close above the breached 38.2% Fibonacci level at $4,652, alongside the formation of a potential bull-trap, would support the possibility of an end to the near-term pullback.

However, further upside action will be needed to confirm this scenario. A close above the 38.2% retracement of the $5,598–$4,402 pullback, along with filling today’s gap and a sustained break above the $5,000 psychological level (also the 50% retracement), would generate a stronger bullish signal.

On the downside, today’s rebound could merely be positioning for another leg lower. Near-term action remains heavily influenced by Friday’s massive bearish candle, and overall sentiment remains negative due to weakening key fundamentals and lingering fears of further losses after the recent panic selling.

Key support levels to watch are $4,359 (50% retracement) and $4,348 (top of rising thin daily cloud spanning $4,348–$4,218). A break below these levels would signal renewed bearish momentum and open the way toward targets at $4,067 (61.8% Fibonacci retracement of $3,120–$5,598) and the psychological $4,000 mark.

Res: 4859; 4900; 5000; 5100
Sup: 4402; 4348; 4218; 4170