Zong Xiaoli: The US dollar initially fell then rose, gold initially rose then fell. What's the underlying logic? How to respond?

Happy New Year to everyone! Wishing you a joyful Spring Festival and all the best in everything! After a holiday break, we are officially back to work today, and the market reviews and gold analysis have resumed normal updates. Please stay tuned…

Currently, the US dollar index is at a critical juncture, especially influenced by the Supreme Court ruling on the 20th of this month, which put significant pressure on the dollar index, causing a sharp decline. However, as the dollar rebounded yesterday, it indicates that market sentiment and actions have returned to the previous rhythm, aiming to attract capital back by pushing up the dollar index. As long as this main trend remains unchanged, the dollar index will continue to rise. Additionally, tonight there will be President Biden’s State of the Union address, which will likely have a considerable impact on the market, so don’t overlook it. Always stay alert for the possibility of the dollar index strengthening and try to go with the flow…

As for gold, it surged yesterday but dropped sharply today, creating a rollercoaster market. Many people are confused—why does it change so suddenly when the outlook for gold is supposedly positive? Has the Middle East situation cooled down? Honestly, that’s somewhat true. Despite Trump’s various escalations and upgrades, he is actually hesitant to give the order to strike, as he’s afraid to act impulsively. Why is the situation tense now? It’s mainly for negotiation purposes—once negotiations can continue smoothly, there won’t be a need to take military action. So, there’s no need to worry too much. However, we can’t rule out the possibility of action in the future; in certain situations, action may still be necessary. That’s why gold’s recent movements are so chaotic—rising when tensions are high, falling when tensions ease. This makes the trend very unpredictable and difficult to read. Everyone should be very cautious—only trade when you understand the market, and never trade if you don’t. Remember that!