Gold News: Losing the 50-Day Moving Average—Is a Prolonged Downtrend Ahead?

Bulls Lose Grip as Stronger Dollar and Trade Optimism Pressure XAU/USD

Gold prices came under renewed pressure on Friday, slipping more than 1% as the market failed to build on Thursday’s sharp intraday recovery. Despite a temporary rally from lows near $3,120.76, the yellow metal remains on track for its worst weekly performance in six months. Sentiment has turned increasingly cautious as traders react to a firmer U.S. dollar and easing global tensions.

At 11:28 GMT, XAU/USD is trading $3174.60, down $65.36 or -2.02%.

Dollar Strength and Trade Truce Weigh on Gold Appeal

The U.S. dollar index (DXY) is poised to notch its fourth consecutive weekly gain, bolstering its position against major currencies and dampening gold’s appeal for non-dollar holders. A temporary U.S.-China trade agreement, which includes mutual tariff reductions, has also undermined safe-haven demand. This progress in trade negotiations has lifted broader market sentiment, reducing the need for defensive positioning in gold.

WisdomTree strategist Nitesh Shah noted that “optimistic signals in terms of trade negotiations” alongside dollar strength have been key drivers weighing on gold this week. The risk-on tone is evident across asset classes, further limiting upside momentum for the metal.

Technical Breakdown at Key Moving Averages Raises Bearish Risks

Gold’s recent reversal from the $3,120.76 low occurred within a major retracement zone between $3,166.46 and $3,087.70. However, despite Thursday’s sharp bounce, Friday’s pullback highlights the market’s struggle to maintain bullish traction.

The 50-day moving average at $3,161.80 remains a critical technical pivot. While gold managed to reclaim this level intraday on Thursday, price action on Friday again tests this support. Failure to hold above it could open the door to deeper retracements. A broader downside target lies between $3,018.52 and $2,904.85.

Fed Rate Cut Expectations Offer Limited Support

U.S. economic data released this week showed signs of cooling inflation and weaker activity, prompting traders to price in increased odds of further Federal Reserve rate cuts. While rate cut expectations typically support non-yielding gold, that tailwind appears muted for now as other macro factors dominate.

Still, Tim Waterer of KCM Trade suggests that gold continues to find support on dips, underscoring its role as a favored hedge asset in an uncertain growth and inflation environment.

Gold Market Outlook: Bias Tilts Bearish Unless 50-Day Moving Average Holds

Despite temporary rallies, the technical pattern of lower highs and lower lows signals a bearish bias for gold in the near term. A decisive break below the 50-day moving average could trigger another leg lower toward the $3,018–$2,905 support zone.

Unless buyers defend key technical levels and the dollar eases, the gold prices forecast remains tilted to the downside. Traders should watch today’s close closely for confirmation of broader direction.

More Information in our XAU/USD.