"Long Squeeze" Backlash, Deleveraging Signals Amid Extreme Volatility

Commodity

Summary:

Precious metals volatility remains elevated, with gold recently demonstrating pronounced features of high-leverage speculation and passive deleveraging. The extreme price swings appear to reflect a concentrated long-position deleveraging process rather than a trend reversal.

SELL XAUUSD

EXP

TRADING

4862.75

Entry Price

4529.00

5025.00

4966.04 +188.15 +3.94%

0.0

Pips

Flat

4529.00

Exit Price

4862.75

Entry Price

5025.00

Fundamentals

During Thursday's trading session, the precious metals market faced another wave of concentrated selling. Spot gold retreated sharply from its intraday high of $5,006 to a low of $4,805, shedding over $200 within a two-hour window. Silver mirrored the weakness, plunging from $89.56 to $73.77, with volatility amplifying significantly over a compressed timeframe.

From a market microstructure perspective, this decline was not triggered by a singular fundamental catalyst. Rather, it appears to represent a repricing of overstretched long positions following the preceding parabolic advance. As market participants reassess the record-breaking rally since last year alongside the historic drawdown observed since early this year, the precious metals complex is likely to remain in a high-volatility regime over the near term.

Notably, the recent "rapid spike—sharp retracement" price pattern within narrow time windows indicates elevated leverage participation. In the absence of sustained incremental buying, leveraged longs become particularly vulnerable to forced liquidation during pullbacks, creating a cascading long squeeze dynamic.

Historical precedent suggests that following significant realized volatility expansion, markets typically require a period of consolidation to digest excessively concentrated positioning. Until such structural rebalancing occurs, the sustainability of any directional move will remain questionable. Overall, the current sell-off appears more consistent with technical or cyclical correction rather than a fundamental deterioration in precious metals' macro narrative; however, short-term trading risks have materially increased.

"Long Squeeze" Backlash, Deleveraging Signals Amid Extreme Volatility_1

Technical Analysis

The 4-hour chart reveals that gold encountered decisive resistance near yesterday's high of $4,944, with bullish momentum visibly waning.

Price has decisively broken below the MA100, indicating a deterioration in short-term trend structure. The MACD fast line is converging toward the signal line from above, with a bearish crossover risk mounting. Concurrently, the Relative Strength Index (RSI) has breached the 50 neutral threshold into bearish territory, suggesting a defensive shift in market sentiment.

Initial downside support is identified at the $4,790 level, corresponding to the prior session's low. A breach below this zone would expose the next support cluster near $4,594, potentially attracting medium-term value-oriented longs.

To the upside, $4,945 remains the critical watershed. Until this level is reclaimed on a closing basis, any rebound is more likely to constitute technical relief rather than trend resumption. Further resistance is located near the Asian session high of approximately $5,024.

Trade Recommendations

Trade Direction: Sell

Entry Price: 4916

Target Price: 4529

Stop Loss: 5025

Valid Until: 23:55:00, March 1, 2026

Support: 4854/4827/4809

Resistance: 4945/4995/5001

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