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That gold block is a resistor and it generates a lot of heat, hence melted the insulation on the red wire. If you patch up the red wire, you will also need to reroute it so that it doesn't make contact with the resistor. Otherwise you will end up with the same problem in a couple days.
We can't tell what that red wire is, but most likely it made contact with the resistor and shorted out something.
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