Wen Chengkai: 3.23 Gold and Crude Oil Stage Stunning Reversal, Post-Market Trend Analysis

On Monday, March 23rd, during the European trading session, the international gold market experienced extreme volatility, showcasing an epic V-shaped reversal with a “sharp decline followed by a rebound.” Spot gold initially fluctuated around $4,530 and moved lower, but due to expectations of high global interest rates and short-term easing of geopolitical premiums, it suddenly plunged off a cliff, dropping sharply to $4,097—nearly a 10% decline—marking the lowest level in nearly four months. Short-term panic selling triggered intense market fluctuations.

However, after the extreme decline, bulls quickly launched a strong rebound, with bottom-fishing and safe-haven buying flooding in, pushing gold prices sharply higher from the lows. During the session, prices recovered to around $4,462, erasing approximately $360 of the intraday loss, staging a “desperate counterattack.” As of the time of writing, spot gold is at $4,454, still below the opening price but rebounding over $300 from the intraday low. Volatility hit its highest level in 2023, with fierce battles between bulls and bears.

The domestic market moved in tandem, with gold T+D falling to a low of 962 yuan/gram before rebounding to 979 yuan/gram. The main contract of Shanghai Gold futures also showed a rebound from lows, with previous declines significantly narrowed, easing panic sentiment in the precious metals market.

1: Core Logic of the Reversal: Three Forces Resonating to Drive Rapid Gold Price Rebound

(1) Technical Oversold Repair + Short Covering
After a nearly 10% single-day plunge, the daily RSI indicator dropped into severely oversold territory. Coupled with strong technical support around $4,100, algorithmic bottom-fishing funds and short covering formed a combined force, driving a quick rebound. Historical data shows that after a single-day drop of over 8%, there is an 85% chance of technical correction within 1-3 trading days. This rebound is a rational correction after overselling.

(2) Reassessment of Geopolitical Risk Premiums and Safe-Haven Demand Resurgence
The dramatic turn in Middle East tensions became a key catalyst for the rebound. Although geopolitical premiums temporarily eased in the early session, conflicts between the US and Iran have not substantively eased. The US last-minute ultimatum of 48 hours is still unfolding, and Iran has strongly stated it will block the Strait of Hormuz. The situation could escalate further at any time. Market participants realize that geopolitical risks have not been eliminated—only short-term emotional outbursts—leading safe-haven funds to flow back into gold, restoring its safe-haven attributes.

2: Technical Analysis:
Daily Chart: After a sharp decline, gold quickly rebounded, forming a long lower shadow pattern. RSI rapidly recovered from oversold levels, and MACD green bars narrowed, indicating strong short-term rebound momentum, but the overall trend remains downward, with no clear reversal signal yet.
4-hour Chart: Shows a V-shaped reversal, with prices bouncing from the lower Bollinger Band to near the middle band. MACD formed a golden cross below zero, indicating bullish momentum beginning to release, but short-term moving averages still exert resistance overhead.

Support levels:

• $4,100 (intraday low, strong short-term support)
• $4,300 (rebound lifeline; losing this may return to weakness)

Resistance levels:

• $4,500–$4,530 (previous consolidation zone lower boundary, key resistance for rebound)
• $4,530 (near today’s opening price; must break through to ease the weak pattern)

Market outlook and trend judgment:
In the short term, gold is entering a “consolidation and correction + range-bound” phase. The sharp decline has paused, but a clear reversal signal has not yet emerged. The core battle between bulls and bears is concentrated between $4,300 and $4,500. If prices can effectively break above $4,500, further rebound space opens. If support at $4,300 is broken, the market may test the intraday lows again.

3: Risk Warning
If the Middle East situation unexpectedly eases, geopolitical premiums may further diminish, leading to a correction testing support levels. Strong US economic data could reinforce hawkish Fed expectations, prolong high interest rate cycles, and suppress gold rebounds. Short-term market volatility remains high; investors should strictly control positions, set tight stop-losses, and guard against secondary fluctuations, avoiding chasing highs or panic selling.

4: Institutional Views
Major institutions like JPMorgan and Deutsche Bank maintain a long-term bullish outlook, believing the current V-shaped reversal confirms gold’s safe-haven resilience. Short-term adjustments do not alter the long-term fundamentals such as central bank gold purchases and de-dollarization. They project gold prices by the end of 2026 to be between $6,000 and $6,300. However, institutions also warn of volatility risks from the high-interest-rate environment in the short term and recommend phased positioning for medium- and long-term investors.

The market always contains both bullish and bearish voices; there is no consensus on whether prices will rise or fall. This is the fundamental rule of market operation. When making trading decisions, do not overthink conflicting opinions—they only interfere with judgment and trigger emotional swings, causing you to waver between holding and exiting, ultimately leading to poor decisions. I firmly believe that reliable trading guidance should always be responsive and well-grounded.