Wall Street retreats to the fence after flash selloff, Main Street remains bullish ahead of thin holiday trading week

• Wall Street sentiment shifted neutral (33% bullish, 25% bearish, 42% sideways) after the unexplained selloff, while Main Street investors held at 63% bullish in Kitco's survey of 257 retail traders
• CME gold futures open interest has dropped by nearly 150,000 contracts since late January as retail traders migrate to smaller 'mini' contracts, with analysts suggesting speculators and momentum traders are now driving volatility more than institutional players
• Analysts cited multiple risks for next week including thin holiday trading (U.S. Presidents Day, Chinese New Year), potential Supreme Court ruling on presidential tariff powers, and Fed Chair nominee Kevin Warsh's upcoming rhetoric as key factors to watch

Market Summary: Gold Volatility Persists Amid Flash Selloff

Key Price Movements:

Gold experienced extreme volatility this week, opening at $4,980.36/oz and reaching a weekly high near $5,120 before suffering a mysterious flash crash on Thursday. At 11:05 AM ET, gold plummeted from $5,068 to $4,889 in just 20 minutes—a $179 drop with no clear catalyst. The metal recovered quickly, reclaiming $5,000 before Friday's open and closing the week at $5,042.74, up 1.06%.

Market Dynamics:

Analysts noted a significant shift in trading patterns, with CME open interest dropping nearly 150,000 contracts since January 23rd. Trading volume has migrated to smaller retail-friendly contracts (minis), suggesting speculators and momentum traders are driving volatility while institutional money remains sidelined. Kevin Grady of Phoenix Futures suggested the selloff may have been triggered by margin calls.

Sentiment Divergence:

Wall Street analysts showed uncertainty about near-term direction, with 33% bullish, 25% bearish, and 42% neutral. Main Street investors remained optimistic at 63% bullish versus 20% bearish.

Market Outlook:

Analysts cited multiple headwinds: Presidents Day and Chinese New Year creating thin trading conditions, negative seasonals, and uncertainty around Fed Chair nominee Kevin Warsh and pending Supreme Court tariff decisions. FxPro's Alex Kuptsikevich warned that weakness in silver and platinum signals a potential bear market, projecting gold could test $4,600-$4,700 support.

Key Catalysts Ahead:

Fed minutes (Wednesday), Q4 GDP/Core PCE data (Friday), and potential Supreme Court tariff ruling could drive significant volatility in coming weeks.