Photo/Liu Guomei (NBD)

On Monday, COMEX gold futures fell 3.01%, to $2,341.10 per ounce, marking the largest single-day drop since June 2022; COMEX silver futures fell 5.58%, to $27.235.

Looking at the latest trends, COMEX June gold futures have retreated from historical highs, stabilizing at key support levels. This slowdown from the peak may indicate a standard market adjustment. However, as the Relative Strength Index (RSI) approaches a neutral stance from previously overbought levels, and the stochastic indicators near oversold conditions, the market seems to be reassessing its position.

According to reports, James Heltzke, a technical analyst in Florida, the short-term outlook for gold and other precious metals is cautiously bearish given the convergence of technical indicators and market sentiment. The recent bullish momentum is losing steam as prices have pulled back from their highs and the Relative Strength Index (RSI) has declined to more moderate levels.

The large number of short positions held by commercial traders should not be ignored. Their professional assessments and risk management strategies often allow them to accurately anticipate and prepare for market pullbacks. In fact, these entities are hedging against an economic downturn by holding such large short positions outweighs the bullish bias of large speculators, which may be based on momentum rather than fundamentals.

Furthermore, the stability of prices at current support levels does not convincingly demonstrate a strong bullish recovery. If these support levels fail to hold, there is a good chance of accelerated selling, as large speculators may quickly close out their positions to reduce losses, adding to downward pressure.

In conclusion, while gold has historically been a safe-haven asset during periods of uncertainty, current indicators - from technical analysis to COT positions - suggest that traders should be prepared for potential downside risks. For those looking to navigate the impending challenges in the gold market, caution and close market monitoring will be key in the coming weeks.