Yesterday, gold plummeted, causing many people to panic. However, I believe that this pullback to the 200-day moving average represents an excellent opportunity, and I will explain the reasons behind this.🧐

Since August 2025, in the past six months, gold has soared from $3,400 to a high of $5,600. Due to the earlier extreme one-sided rise, gold prices once reached 1.6 times the five-year average, resulting in an excessive buildup of speculative leverage in the market. This round of crash erases this year's gains, resembling more of a "technical pullback," flushing out those weak-willed speculators. Only after clearing out the leverage can we set out on a better journey, and once the Middle East conflict eases and oil prices begin to fall, gold will welcome new opportunities!

1️⃣ First, we need to clarify why gold has dropped so severely?

In essence, it is due to the "hedge trap" from Wall Street. Many believe that with geopolitical turmoil in the Middle East, gold prices should skyrocket, but reality has slapped everyone in the face; the truth is that gold has become a victim of crude oil.

Currently, the positions of major institutions on Wall Street are quite crowded, with crude oil bulls tightly packed, while short positions in gold are simultaneously increasing. They have played a classic "long oil, short gold" hedge combination. Because the rise in oil prices has reignited inflation, the old timers at the Federal Reserve have begun to speak hawkishly, directly slashing interest rate expectations.

The chain of trading logic is very clear: Oil prices rise → Inflation increases → Interest rates cannot drop → Cost of holding gold rises → Sell gold to hedge against the risk of long positions in oil.

However, the current situation is that due to the repeated fluctuations of crude oil prices, with huge volatility, gold has become a cash machine for the market. In order to make up for the margin calls on crude oil or other positions, everyone is cutting losses on gold, which has become a consistent trigger for the market's gold crash. Coupled with Wall Street's quantitative trading, if it breaks a certain threshold, it will trigger a chain reaction, further exacerbating volatility.

2️⃣ Strip away the noise and see the truth of gold in the "discrepancy area"

Any asset's price rise will go through six stages: accumulation zone, initiation zone, consensus zone, discrepancy zone, invalidation zone, and deleveraging zone. The various noises in the market clearly indicate that the price of gold has entered the discrepancy zone. The biggest characteristic of this stage is its challenge to various kinds of unwillingness.

Good news doesn't lead to price rise: Geopolitical conflicts escalate, and gold prices remain unchanged or even drop slightly.

Narrative conflicts: Some say the dollar system is about to collapse, which is a long-term positive, while others say interest rates will skyrocket, which is a short-term negative.

False breakouts: It looks like it will rise, but you get trapped; it looks like it will crash, but it suddenly rebounds.

At such times, there are two strategies: First, hold cash and wait for the right side to act. Second, when it falls to a critical point, such as the 200-day moving average, start gradually dollar-cost averaging. The market is never worried about sharp declines; the most frightening thing is a continuous downward trend that seems endless. The current dramatic fluctuations in gold, on the contrary, present a good opportunity. Essentially, it is about cleaning out leverage. If those chasing highs and lows are not washed out, the vehicle is too heavy to run smoothly.

3️⃣ The fundamental situation of gold has not changed, closely watch the "structural internal injury" of the dollar

Even if the gold price drops below $4,500 or even revisits last year's starting point, has the fundamental situation changed? Not at all.

First, interest on U.S. debt, with $38 trillion in debt, interest expenditures exceed military spending; this is a deadlock. As long as this knot remains unresolved, the credit of the dollar will continue to decline.

Secondly, look at global central bank purchases; we should closely monitor the actions of each country's central bank. Especially the continuous purchases by the Chinese central bank, which have been ongoing for the 16th month, with gold reserves reaching 74.22 million ounces (as shown in Figure 2). Although the purchase volume has started to slow down, overall, it still reflects dollar-cost averaging logic: buy slowly when prices are high, and buy quickly when prices are low. If the gold price drops below $4,000, and the central bank begins to accelerate its "shopping", that would be the most definitive signal to enter on the right side.

4️⃣ Operation suggestions

I have personally begun to gradually dollar-cost average into gold positions during this wave of gold decline; the 200-day moving average is a key point. However, you must control your position well; do not go all in at once but implement a phased investment plan. The current volatility in the discrepancy zone might make most people uncomfortable. If you, like me, are a long-term holder of gold, this drop is an opportunity to build positions in phases, rather than a reason to cut losses.

Additionally, keep a close eye on two "barometers":

The first is the Strait of Hormuz; as long as it is not completely closed, the rebound of oil prices is just a matter of time. Moreover, Trump has given Iran five days to consider; once the situation eases, oil prices drop, and the short positions in gold will retreat.

Secondly, the Federal Reserve softening; as long as they start to show signs of "the economy cannot sustain, we will have to ease" mentality, gold prices will instantly take off, likely reaching new highs.

On investment targets, I am following several precious metal ETFs and gold stocks on the #MSX platform, #GLD.M (Gold ETF), #SIVR.M (Silver ETF), #CPER.M (Copper ETF).

If you are more interested in gold stocks in the U.S. market, you can pay attention to Newmont Mining (#NEM) and Agnico Eagle Mining (#AEM).

In summary, I believe that the current gold bull market is far from over; it is simply in a "detox" phase. The current decline is a technical sell-off caused by liquidity contraction and institutional hedging. Once Wall Street's "long oil short gold" game approaches its boiling point, they will run faster than us to buy back gold. The current strategy can be summarized in 12 characters: "Respect the market, invest in phases, hold on to positions."

The companies mentioned above are available on #MSX, and for trading U.S. stocks, I choose to use #RWA tokenized platform #MSX to invest in the U.S. stock market: http://msx.com/?code=Vu2v44

Early investors and partners in U.S. stocks can message me; after filling out the form, you can enter the U.S. stock discussion and exploration community for free (currently limited to 10 people weekly, assistant approval may take a little time, thank you🙏)!

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