Are the hunters about to become the hunted?
By Ole Sloth Hansen · November 2, 2026
Precious metals continue to stage a strong recovery, gaining further momentum over the past couple of hours as crude oil prices slump on renewed hopes for a negotiated end to the Middle East conflict. The latest optimism follows reports that Iran's supreme leader has authorised the government to pursue talks aimed at resolving the months-long conflict.
As highlighted in my gold update earlier today, Friday's break below key support at USD 3,970 triggered an acceleration in technical and momentum-driven short selling, compounded by further long liquidation.
However, with sentiment improving and gold rebounding, the focus is now shifting towards the risk of a short squeeze. For sellers to come under meaningful pressure, gold must first reclaim the former support level at USD 3,970, now turned resistance. A sustained move back above USD 4,000 would provide a stronger signal that downside momentum is fading, potentially forcing recently established shorts to cover.
The sharp decline in crude oil prices is also helping ease inflation concerns and the associated pressure on bond yields, providing an additional tailwind for precious metals. However, much will depend on whether diplomatic optimism translates into tangible progress and whether the broader recovery in risk sentiment can be sustained.
Whether gold can clear these technical hurdles remains to be seen. But after Friday's aggressive selling, the risk-reward balance for short sellers may be starting to shift. For now, at least, the hunters may be wondering whether they are about to become the hunted.
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