On Monday, CME Group raised its margin requirements, extending the decline in gold and silver after U.S. President Donald Trump nominated Kevin Warsh as the next Federal Reserve chairman. Previously, precious metals saw a significant sell-off due to President Trump's nomination of Kevin Warsh as the next Fed chair last week. "While Warsh's nomination may have been the initial catalyst, it doesn't explain the magnitude of the decline in precious metals," said Tim Waterer, chief trading analyst at KCM. "Forced selling and increased margins created a ripple effect." Analysts at JPMorgan, however, anticipate that despite recent market volatility, the upward trend will persist in the long term. Over the weekend, President Trump indicated that the U.S. is "on the verge" of a deal with Iran. Concurrently, Iran's Supreme Leader, Ayatollah Ali Khamenei, warned that any attack on Iran would trigger a regional conflict, while the U.S. continues to augment its troop presence in the region. Emma Wall, chief investment strategist at Hargreaves Lansdown, commented, "Investors and global central banks have favored gold as their preferred reserve currency, viewing it as a hedge against U.S. policy." She further noted, "Some nations have observed the potential seizure of Russian dollar assets by global powers supporting Ukraine, thus making gold a more attractive neutral reserve currency."

Heightened market caution regarding the Federal Reserve's policy trajectory, following President Donald Trump's nomination of Kevin Warsh as the next Fed Chair, could bolster the dollar. This action is interpreted by the market as a signal of a more restrained and disciplined approach to monetary easing by the Fed. Fed officials have also adopted a cautious stance. St. Louis Fed President Alberto Musalem indicated no need for further rate cuts, deeming the 3.50%-3.75% policy range largely neutral, while Atlanta Fed President Raphael Bostic reiterated that policy should remain moderately restrictive. The U.S. ISM Manufacturing Purchasing Managers' Index (PMI) data is scheduled for release later on Monday. The index is expected to rise to 48.3 in January from 47.9 in December. A weaker-than-expected PMI report could weigh on the dollar and support commodity prices denominated in USD, as a softer dollar makes dollar-denominated gold more attractive to international purchasers.

In the 1W timeframe, gold has formed a bearish evening star pattern, signaling a potential short-term price peak. If it fails to hold the EMA 12, it's highly probable that the price will decline towards the middle Bollinger Band and EMA 50, which are situated around 4126 and 3800, respectively. Conversely, if support is established, a rebound to 4800 and 5000 is likely. The RSI is currently at 60, indicating predominantly optimistic market sentiment among investors. In the 1D timeframe, the Bollinger Bands have narrowed, and the moving averages are flattening. Following the evening star formation, the price has continued to decline with a large bearish candle, suggesting that the short-term downtrend is ongoing. The MACD has also generated a death cross at a high level, and the MACD line and signal line are retreating towards the zero-axis. Given the current distance from the zero-axis, this implies that the downward movement is not yet complete. Immediate support levels are identified at 4100 and 3900. The RSI is at 43, reflecting strong selling pressure in the market. It is recommended to go short before going long.

Trading Direction: Buy

Entry Price: 4100

Target Price: 5000

Stop Loss: 3800

Support: 4500, 4200, 4100

Resistance: 4700, 4800, 5000