After a violent 13% drop, a strong rebound! Buying at the bottom drives gold futures to achieve the largest single-day increase in 16 years.

On Tuesday, Comex gold futures rose 6.1% to $4,903.70 per ounce, marking the largest one-day US dollar gain in history and the best one-day percentage gain since March 19, 2009. The sharp rebound in gold price attracted bargain hunters back into the market after a cumulative 13% plunge in the previous two trading days. Some analysts suggest that the rebound in gold prices confirms the view that recent selling pressure is more driven by short-term speculative positions and momentum trading, rather than fundamental changes in the market. Analysts at Sucden Financial stated in a report, "Prices had previously been significantly higher than levels typically associated with pure hedging demand related to geopolitical or macro uncertainty. Therefore, this pullback does not appear to be due to uncertainty dissipating, but rather more like a clearing of excessive positions." Following the sharp drop in gold prices last Friday, several asset managers believe that the decline in gold is not simply due to weakening fundamentals, but more of a reassessment of concentration risk. Kate Stovis, investment manager at Mattioli Woods, pointed out that just like AI and tech stocks experienced drastic fluctuations due to overcrowding, gold also bore too much capital and narrative. When everyone is on the same side, even high-quality assets struggle to avoid severe selling during deleveraging. Some institutions believe that the process of gold surging towards the $5000 level has been too smooth, lacking necessary pullbacks and turnover. Tony Medos, investment director at BRI Wealth Management, noted that the continuous weakening of the dollar has provided significant support for gold prices, but signs of stabilization in the dollar have emerged recently. While central bank buying remains a crucial pillar for gold in the medium to long term, this force has cooled down in recent months. Many market participants point out that despite the correction, the basic logic of gold remains unchanged, as structural driving factors such as high geopolitical risks, macro uncertainty, inflows of diversified asset allocations, and ongoing central bank purchases continue to be solid. Joni Teves, strategist at UBS, stated in a report, "We believe that this correction will be beneficial for the market in the long run. This phase should provide opportunities for investors to establish long-term strategic positions at more attractive entry levels." However, some analysts caution for prudence. Rania Gule, senior market analyst at XS.com, warned that the recovery of some of the recent losses is "fragile" as it is not built on fundamental changes in monetary policy or global risk patterns, but more on a temporary pause in the strength of the dollar rather than a sustained weakening. Quek Ser Leang, from the Global Economic and Market Research Department at Dahua Bank, stated in a report that technical indicators suggest the recent strong upward momentum in gold may have temporarily eased. He pointed out that spot gold broke below the 55-day exponential moving average on Monday, for the first time since August 2025, which usually signals a pause in the current upward trend.