Drop in the Morning, Rebound in the Afternoon: Gold Rebounds Quickly, Here's Why!
The price of gold (XAU/USD) started today's trading under intense pressure, dropping to the 4,654 area before rebounding and now hovering above 4,800. This "drop first, then bounce" pattern reflects a still highly volatile market: on one hand, there's forced selling, on the other, buyers entering when prices are perceived as "discounted."
The opening weakness was largely driven by deleveraging/forced selling. After the extreme volatility of the past few days, the CME has again increased the initial margin on gold and silver contracts, forcing traders to increase collateral to maintain their positions—and those unable to do so often choose to close them, triggering sudden selling pressure, especially during Asian hours when liquidity tends to be thinner.
The pressure is exacerbated by the risk-off global market conditions, particularly when stocks—particularly the technology sector—fluctuate sharply. In situations like this, gold is sometimes sold not because of "poor gold fundamentals," but because market participants need quick cash to cover losses or meet margins in other assets. Finally, the 4,654 area became a sort of "position cleanup area" when stop-loss orders and subsequent liquidations occurred.
After the wave of forced selling subsided, the price rebounded. The rebound primarily stemmed from dip-buying and short covering. Once the primary selling pressure dissipates, the price typically "returns to the intraday value area"—especially if the initial decline was driven more by margin calls and sentiment, rather than major changes in physical gold demand.
From a daily fundamental perspective, the market is also monitoring geopolitical factors, including the US-Iran talks in Oman, scheduled for Friday. As the prospect of diplomacy increases, safe-haven demand could weaken; but if the talks go poorly, the risk premium could rebound and push gold higher rapidly.
The next focus is tonight's US data: Michigan Consumer Sentiment (preliminary February), released at 10:00 a.m. ET (approximately 10:00 p.m. WIB). This data could move the dollar and interest rate expectations. If the result is weaker, the USD could potentially weaken and give gold room to hold/rise, while stronger data could stall the gold rally.
Technically, the 4,654–4,660 area now serves as key support (today's low). As long as the price holds above it, the intraday bias is likely to rebound, with support at 4,700. On the upside, the 4,820–4,850 area is close resistance; if it breaks and holds, the opportunity for a continuation to 4,900–4,920 opens. Conversely, if it fails to hold and falls further below 4,700, the risk of a retest to 4,660 opens again—as the market remains sensitive to headlines and margin effects.
Source: Newsmaker.id
