Gold (XAU/USD) entered a volatile period Tuesday after an early reversal caught buyers off guard, with one prominent analyst warning that the current market psychology could wipe out 90% of traders caught on the wrong side. The sharp move lower followed a strong Monday open and has split market participants into two camps: those expecting a deep correction and those viewing the decline as a stop-loss hunt before another upside surge.
Earlier analysis had shown gold defending the critical $4,540–$4,550 support zone, with bulls targeting a break above $4,590 to validate a recovery toward $4,600–$4,620. However, late Monday and early Tuesday brought a failure to sustain upside momentum, and gold began to slide, putting pressure on long positions established during the rally. Analyst Itsadiee_Fx described the move as a liquidity grab designed to force weak hands out, warning that chasing the downside now could be just as dangerous as buying too early.
Key support now lies between $4,504 and $4,513, with a backup zone at $4,496–$4,484. The broader structure remains supported by an ascending trendline from mid-May, which has so far held. If gold manages to hold these levels, a sharp rebound toward $4,572 or higher is possible. A breakdown below $4,490, however, would invalidate the bullish setup and expose deeper declines. The tension between trapped buyers and aggressive short sellers sets the stage for a potentially large directional move, with the analyst projecting a breakout above $4,572 before Wednesday if bullish momentum returns during off-market hours.
The current gold price action is being closely watched by broader financial markets, including crypto, where assets like Bitcoin often correlate with gold during macro uncertainty. While gold is not a cryptocurrency, sudden volatility or a sustained breakdown in precious metals could dampen risk appetite across asset classes.
