Today’s market analysis on behalf of Dilin Wu Research Strategist at Pepperstone

(MENAFN- Your Mind Media )
Header: Gold tumbles over $1,000 from record highs af’er Warsh’s Fed Chair nomination fuels hawkish bets. Rising futures margins and easing geopolitical tensions have amplified short-term volatility. Traders will be closely watching key U.S. data, especially nonfarm payrolls, to gauge’the market’s next move and manage risk.

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Since last Thursday, gold has seen a rapid and sharp pullback. Prices fell from near the $5,600 all-time high, with a maximum decline of over $1,000 in just three trading days, amplifying volatility.

The immediate t’igger was Trump’s nomination of Kevin Warsh as the next Fed Chair. The news quickly prompted a market repricing of Fed policy, boosting hawkish expectations. At the same time, frequent increases in CME futures margins and easing geopolitical tensions further heightened de-leveraging pressure on long positions.

Looking ahead to this week, traders are focused on a series of key U.S. economic data, including the nonfarm payroll report, to gauge gold’s direction after the recent swings.

Technical Observation: Digesting a Rapid Pullback

After long positions were further stretched at the start of last week, XAUUSD briefly spiked to $5,598 on Thursday, just shy of the $5,600 mark. What traders had long fe—red—a sharp corr—ction—quickly unfolded, with prices dipping to $5,100 that same day.
On Fri’ay, gold’s intraday drawdown exceeded 12%, breaching the key $5,000 psychological level. The RSI fell sharply from extreme overbought levels near 90 back to neutral, reflecting a concentrated unwinding of previously overcrowded long positions.


Bearish momentum has continued into this week, with prices down more than $1,000 from the record highs, currently test’ng December’s high at $4,550. If selling pressure persists, support may be found near $4,300 and the 100-day moving average.

Conversely, if $4,550 holds and buyers step back in, resistance may emerge around $4’630 and Friday’s close near $4–880, with $4,980–$5,000 remaining the key range for a retest. A sustained move above $5,100 would help confirm the re-establishment of a bullish trend.

Warsh Nomination Sparks Hawkish Repricing

Last week, Trump officially nominated Kevin Warsh as the next Fed C’air, triggering gold’s pullback from record highs.

Compared with other potential candidates, Warsh is viewed as both policy credible and politically flexible: he may support rate cuts in coordination with Trump under the right conditions but has a low tolerance for inflation and has long adv’cated shrinking the Fed’s balance sheet.

Markets quickly interpreted his nomination as a hawkish tilt for the Fed. The DXY rebounded sharply from four-year lows, pressuring dol’ar-denominated gold. Warsh’s perceived ability to preserve Fed i’dependence also reduced gold’s appeal as a hedge against policy uncertainty.



’mportantly, gold’s pullback wasn’t solely about the news itself but reflected over-concentrated long positions, which made the market extremely sensitive to any negative catalyst. Warsh’s nomination ultimately became th“ “final s”raw” for high-position longs.
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Combined with Frida’ night’s extreme moves, some quantitative and programmatic strategies likely triggered stop-losses in a highly leveraged, volatile environment, amplifying the selloff.

Higher Margins and Easing Geopolitics Accelerate De-leveraging

Beyond the Fed nomination, two additional factors mag’ified gold’s retreat.

First, since mid-January, CME changed its precious metals margin calculation from a fixed dollar amount to a percentage of contract size. On top of this, CME raised maintenance margins five times over nine trading days as of last week, sharply increasing margin calls and forced liquidations, prompting some participants to exit positions.

Second, easing geopolitical tensio’s reduced gold’s safe-haven demand. New– of renewed U.S.–Iran engagement and plans for an ea–ly February Russia–Ukraine trilateral meeting helped cool risk pricing, acting as a short-term headwind for gold.

Medium-Term Bullish Thesis Remains Intact

Despite significant ’ear-term selling, gold’s three core medium- to long-term drivers remain intact: rising global sover’ign credit risk, the Fed’s ongoing rate-cut, and policy/geopolitical uncertainty driving safe-haven demand.

Developed economies continue to face mounting d’bt“pressures, from the U.”.’s “One Bi’ Beautiful Bill” push, Takaichi’s fis’al expansion proposals, to Eurozone’s increasing spending plans.“Compared with fi”cal discipline, the “debt competition” trend is intensifying.

Against this backdrop, concerns over fiscal sustainability and institutional credibility keep central banks purchasing gold, providing long-term support.

From the Fed rate path perspective, structural weakness remains in the U.S. labor market, while tariff-driven inflation effe’ts are more likely one-off. Even with Warsh’s hawkish tilt, the market still prices in two rate cuts by year-end, meaning this pullback reflects sentiment and positioning more than a fundamental shift.

Additionally, intermittent geopolitical developments, the Fed transition, and the upcoming U.S. midterms add to policy uncertainty, potentially reigniting safe-haven demand.

After such volatility, gold’s medium-term bullish case remains, and the price base is likely to rise gradually amid ongoing fluctuations.

Next for Gold: Watch Nonfarm Payrolls
Overall, the recent plunge in gold reflects profit-taking, policy repricing, and forced de-leveraging. Concerns over sovereign credit, Fed rate-cut prospects, and policy/geopolitical uncertainty remain the market consensus.

While the medium-term path of least resistance for gold is still upward, the market is in a pronounced “mechanical de-leveraging” phase.

Gold implied volatility (GVZ) is far above historical averages, approaching levels last seen during the 2008 GFC, making short-term bottom-fishing risky. Traders are likely waiting for clearer trend confirmation.

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