During the Asian session on Monday (March 4), spot gold fluctuated in a narrow range and is currently trading around 2080.

Last Friday, gold prices may have surprised investors and performed a trend of cutting rates. Gold prices broke through the important resistance levels of 2050-2065-2088 continuously, hitting a record high this year, and once reaching the peak at the end of last year. This is a breakthrough of gold after a long period of oscillation. Even though many investors acknowledged that gold would break through the resistance level, they did not succeed in predicting the strength of its upside rush. Most of the upside is driven higher by the stop-loss orders offered by a lot of rang trading paranoids. We emphasized last Wednesday that gold prices will break through the resistance zone in the next two days, and traders need to avoid using a rang trading strategy. If the trend line is breached, the upside will also be opened.

At the moment, the fundamentals remain stable. According to the PMI data released last Friday, the economic data is still resilient. The consumer confidence index shows that US consumers' expectations for the economy have shown marginal deterioration. In this context, although gold prices are more easy to rise, the released data was not strong enough to guide gold prices to strengthen rapidly. Therefore, the market is currently volatile. After the short-term overshoot, as one side admits defeat and leaves the market, gold prices will inevitably need a correction. Shortly, traders should not chase the market but mainly try to go short at highs with small positions.

On Friday, gold prices retreated as low as 2039 in the Asian session, with support in the 2035-2040 area that we are emphasizing. Subsequently, gold prices fell to 2045 after a quick rally to around 2057 was blocked. In the American session, the price rose strongly again to 2088.2. Our strategy trades in the range of 2035-2055. At position 2055, the maximum floating profit was $10. However, the profit was taken back and we left the market at the entry level. On the downside, we missed out on the bullish market. Perhaps, the market taught another vivid lesson about paranoid investing yesterday. Resistance levels in the 2050-2065-2080 area have been broken one by one, and the bears in heavy positions may be hit hard. It is important to emphasize that a stop loss is the most effective way to protect your capital. Only those who succeed in escaping will survive to fight against the new day.

Data: The final value of the US Markit manufacturing PMI in February was revised up to 52.2 from 51.5, which is the highest level since July 2022. The final value of the US consumer confidence index in February was revised down to 76.9 from 79.6, which is the first decline in three months.

There is no big news today, and traders should mainly pay attention to the digestion of market sentiment. This week, the focus will be on the US ADP employment data for February, as well as the non-farm payroll data.

Last Friday, the gold price was incredibly bullish, but it also gave some room for a pullback. On review, this may be a chance for the bears to leave the market. After a quick break above the trend line around 2055, the room for gold to rise was opened, which also delivers on what we have previously highlighted. Eventually, the market closed with a 1cm long bull candle. Perhaps the bears only breathed a sigh of relief at the last closing moment! However, after yesterday's violent rally, perhaps the bearish momentum accumulated by the recent oscillations has been almost stopped. The momentum for gold prices to rush higher has weakened, and the bulls may already be thinking about how to take profits smoothly for now. After all, in the absence of news stimulus, continuing to rise at the current absolute high level will easily cause a counterattack by the bears. After a short-term overbought, gold prices may be able to pull back at any time.

On Friday, gold mainly maintained a volatile trend. In the Asian session, gold prices retreated slightly to 2039, but recovered to 2045 after the bulls counterattacked to 2057. As the 2055 resistance level was not effectively broken, the pullback in gold prices attracted many investors with a rang trading strategy and bearish thinking to enter the market. This also allows us to witness the show of the US market bulls booby-trapping the bears. The price broke through three important supports in one fell swoop, leaving no room for the bears to counterattack. In the 1-hour candlestick chart, gold prices are seriously overbought in the short term after a surge. The MACD has also seen a death cross trend from the highs. During the day, traders should not chase the market, and aggressive traders can mainly go short at highs. Traders who want to take long positions should also wait for a sharp decline to gain support and seize the opportunity to rebound. The same is true for the 4-hour chart, and traders who want to go long need to be cautious. On the daily chart, due to the continuous closing of bull candles in the past few days, the bulls were more bullish, which created another long bull candle on Friday. The golden cross of the MACD was wider, but it was still not in the overbought area. In the short term, the market will be dominated by bulls, and gold prices are still on an upward trend as a whole, but there is no basis for a one-way move to the upside for the time being. During the day, aggressive traders can buy low and sell high in the 2065-2088 range.

Trading Direction: Short

Entry Price: 2088

Target Price: 2065

Stop Loss: 2093

Support: 2078.000/2065.000

Resistance: 2088.000/2100.000