Zong Xiaoli: Gold Trapped in Consolidation, US Dollar Stages Desperate Comeback, What's Next?

Yesterday’s overall trend, I believe everyone saw it—gold fell into a strange oscillation, and the US dollar staged a fierce counterattack, catching many by surprise!

Currently, the Middle East situation is intense, which should be a big positive for the gold market. However, gold hasn’t shown the expected big rally; instead, it has started to decline slowly. This has left many people confused—what’s really going on with gold? Why isn’t it rising when it should, but instead oscillating downward?

In fact, the reason for gold’s decline isn’t very complicated. The fundamental cause is that a large amount of capital is withdrawing from the US dollar, which has driven gold to decline somewhat. After all, gold is dollar-denominated. If some believe the dollar is no longer safe and need to escape from it, a large outflow of funds occurs. Even with gold supporting the market, it can’t withstand continuous outflows. As a result, gold enters a very strange state—some funds try every possible way to push prices up, while others keep withdrawing, causing gold prices to fall. In this complex environment, it becomes increasingly difficult for gold to see a significant rise, and oscillation becomes inevitable. The future market should be approached with a range-bound mindset…

As for the US dollar index, overall, there are still some bright spots, especially in yesterday’s and the day before’s movements—it’s a full-blown counterattack, catching the shorts off guard. This is partly related to the demand for the dollar itself. With liquidity outflows being severe now, if the dollar keeps falling, the outflows would only intensify. Therefore, defending the dollar is the top priority right now, and a dollar rally seems inevitable. However, there are still quite a few funds flowing out, so the dollar faces significant pressure. The key will be tonight’s performance—whether it can break through smoothly, which may provide an answer. As for trading strategies, consider low-buying opportunistically. As long as the market doesn’t throw a curveball, the dollar will find chances to rise, so buying on dips remains the main approach—just for reference!