Can Gold Hold the 50-Day Moving Average as the Dollar Rebounds?
Gold extended its losses into a third consecutive session on Friday, breaking below key technical levels as traders sold off in response to a stronger U.S. dollar, improving risk sentiment, and rising U.S. Treasury yields.
XAU/USD is trading under pressure near $3341.10, the 50-day moving average, after slipping below the short-term pivot at $3347.97. If the yellow metal fails to hold this level, downside momentum could accelerate, with $3310.48 eyed as the next significant support zone.
At 12:16 GMT, XAU/USD is trading $3343.02, down $25.68 or -0.76%.
Firmer Dollar and Stronger U.S. Data Weigh on Bullion
A bounce in the U.S. Dollar Index (DXY) — climbing 0.15% to 97.45 — has made gold more expensive for foreign buyers. The dollar is up despite being on track for its biggest weekly drop in a month. The recovery follows comments from President Trump, who reaffirmed his confidence in Fed Chair Jerome Powell, reducing immediate concerns over central bank independence.
U.S. economic data has continued to outperform expectations. Weekly initial jobless claims hit a three-month low, and the flash composite PMI rose to a seven-month high at 54.6, suggesting resilient business activity. These figures reinforce expectations that the Federal Reserve will hold rates steady at its next meeting, reducing the immediate appeal of non-yielding assets like gold.
Trade Optimism Boosts Risk Appetite, Draining Safe-Haven Demand
Improving trade relations have added further pressure on gold. Washington’s finalized trade deal with Japan and signs of progress with the European Union have lifted market sentiment. The European Commission noted that a negotiated agreement with the U.S. is within reach, although EU members approved counter-tariffs in case talks fail. Optimism has sparked a shift back into equities and away from defensive assets like gold.
Treasury Yields Stabilize, Curbing Bullion’s Appeal
The 10-year Treasury yield was nearly flat at 4.416%, while the 2-year yield stood at 3.927%, reflecting stable rate expectations. Still, the firming in yields — along with the dollar’s strength — has undercut the demand for gold. Despite political pressure from President Trump for lower interest rates, the Fed appears likely to hold its ground, limiting the near-term bullish case for gold.
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See all Gold forecastsGold Prices Forecast: Bearish Outlook Below 50-Day Average
Unless gold bulls defend the 50-day moving average at $3341.10, the technical tone remains bearish heading into next week. A daily close below this level would shift focus to $3310.48, a critical support zone. With the dollar rebounding and no immediate rate cuts expected from the Fed, gold prices are at risk of extending lower. Short-term sentiment favors sellers unless new volatility reignites demand for safe-haven assets.
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