Despite mixed market sentiment, gold has not seen strong follow-up selling and still shows some resilience below the psychological $5,000 level. The results of Japan’s early general election on Sunday removed political uncertainty. At the same time, signs of easing tensions in the Middle East continue to support optimistic market sentiment, precisely the factor putting pressure on safe-haven precious metals. As of February 9, holdings in the world's largest gold ETF, SPDR Gold Trust, rose to 1,079.66 metric tons, an increase of 3.43 metric tons in a single day, indicating that institutional investors continue to add to their gold positions at current levels. Citi strategists noted that if Kevin Warsh is appointed as Federal Reserve Chair, he is likely to adopt a gradual approach to reducing the Fed's $6.6 trillion balance sheet, thereby avoiding the potential for re-igniting liquidity strains in the money market. The bank emphasized that any attempt to restart quantitative tightening (QT) could put pressure on the roughly $12.6 trillion repo market, which saw severe volatility last year, so policy implementation will be more cautious. Citi expects the Federal Open Market Committee (FOMC) to start cutting its monthly bond purchases from the current ~$40 billion to $20 billion from mid-April, continuing through the end of the year. Additionally, the Fed may adjust the maturity structure of its Treasury holdings. For example, swapping maturing long-term Treasuries for short-term bonds to shorten the weighted average duration of its portfolio, or gradually reduce or even stop purchasing Treasury bills, allowing mortgage-backed securities to mature naturally, thereby achieving a mild contraction of the balance sheet. Geopolitically, the U.S. warning on navigation in Iranian waters has heightened regional tensions. Although the U.S. and Iran are preparing for a new round of talks, significant differences remain on key issues. Currently, the likelihood of direct military conflict between the two sides remains low, but regional uncertainty has increased, and potential geopolitical risk events could still provide intermittent safe-haven buying support for gold.

Investors expect the Fed to cut interest rates at least twice in 2026, by 25 basis points each time. This expectation, combined with concerns about the Fed's independence, has led to a sustained decline in the dollar, nearing its lowest level in over a week, which benefits non-yielding gold. The U.S. and Iran have pledged to continue indirect dialogue after what both sides called "positive consultations." Iranian President Masoud Pezeshkian described Friday's nuclear talks with the U.S. as "a step forward," while dismissing any intimidation attempts. The People's Bank of China expanded its gold purchases for the 15th consecutive month in January. By the end of January, China's central bank gold reserves had risen to 74.19 million ounces (about 28 million grams), up from 74.15 million ounces the previous month. As the world's largest gold consumer, China's growing demand could push gold prices higher in the short term. U.S. Treasury Secretary Scott Bessent refused to rule out the possibility of a criminal investigation into Kevin Warsh, President Donald Trump's nominee for Fed Chair, on Thursday, provided Warsh ultimately refuses to cut interest rates. Persistent market concerns about the Fed's independence continue to weigh on the dollar and provide some support to dollar-denominated commodity prices. Wednesday's January U.S. employment data will be closely watched, as it may help clarify the Fed's policy direction. Economists expect the U.S. to have added 70,000 jobs in January, with the unemployment rate projected to remain unchanged at 4.4%. On Friday, U.S. Consumer Price Index (CPI) inflation data will take center stage. Any signs of labor market weakness or slowing inflation could lead to further dollar declines and support dollar-denominated commodity prices in the short term.

The four-hour chart suggests that gold was suppressed by the Bollinger Upper Band again, suggesting a price pullback. It is likely to fall toward the Bollinger Upper Band and the EMA200, at around 4,955 and 4,755, respectively. After a golden cross, the MACD and signal lines have returned above the zero axis, indicating a short-term return to bullish momentum. The RSI stands at 55, showing that market participants are mainly buyers. From a daily perspective, the Bollinger Bands are narrowing, and moving averages are flattening. After an "Evening Star" candlestick pattern, the price continued to fall sharply, meaning the short-term downtrend has not yet ended, but is merely a corrective rebound. A high-level death cross has appeared, with the MACD and signal lines pulling back toward the zero axis. The distance is still large, indicating the decline is incomplete. Support levels are at 4,100 and 3,900. The RSI is at 56, maintaining an optimistic market mood. Thus, it is better to sell now and buy later.

Trading direction: Sell

Entry Price: 5036

Target Price: 4300

Stop Loss: 5600

Support: 4500/4200/4100

Resistance: 4900/5100/5200