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    Analysts from OCBC Bank, Sim Moh Siong and Christopher Wong, observe that gold prices are stabilizing after recent declines.

    by VT Markets
    /
    Feb 3, 2026
    Gold prices are beginning to stabilise after a dramatic drop from over $5,500 per ounce to $4,402 per ounce. Analysts at OCBC Bank indicate that, even with this decline, uncertainty about the Federal Reserve’s policies and the US dollar’s impact could lead to unstable trading in the short term. The key support levels for gold are between $4,400 and $4,600. If prices fall below this range, it may suggest a deeper correction, with additional support around $4,210 to $4,215. While prices have adjusted, outside economic factors could still affect future movements.

    Market Adjustment

    Gold prices are starting to find some stability after dropping dramatically from above $5,500 last week. This sharp decline was caused by a surprising jobs report that revealed the addition of 280,000 jobs in January, supporting the Federal Reserve’s hawkish position. The market is now coming to terms with the idea that rate cuts may not happen as soon as we expected back in late 2025. With uncertainty around the Fed’s next steps and gold’s reaction to the US dollar, trading is likely to be unpredictable. This suggests that options strategies that take advantage of volatility, like long straddles or strangles, could be useful during important economic data releases. Expect price fluctuations as the market reacts to new inflation and employment figures. The $4,400 to $4,600 range is now a critical support area for gold. Traders might think about buying call options with strike prices slightly above this zone in anticipation of a short-term rebound. It’s also wise to have protective put options ready in case this support doesn’t hold.

    Strategy for Deeper Correction

    If prices break below $4,400 consistently, it would indicate a more significant correction is likely. In this situation, buying put options or creating bear put spreads that target the $4,210 to $4,215 support level could be a sensible next step. This strategy aligns with the stronger dollar we’ve seen since the start of the year. Create your live VT Markets account and start trading now.

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