Gold Edges Lower, Eighth Weekly Gain Still Intact
Gold prices slipped on Friday, retreating from Thursday’s all-time high of $2,954.96. Despite the pullback, the yellow metal remains on track for its eighth consecutive weekly gain, up around 1.5% this week. However, recent price action over the last three days reflects uncertainty surrounding U.S. President Donald Trump’s tariff strategies and the Federal Reserve’s interest rate plans. The metal’s recent consolidation suggests a potential vulnerability to a near-term correction, even as the broader bullish trend remains intact.
At 12:09 GMT, XAU/USD is trading $2929.79, down $9.60 or -0.33%.
Technical Signals Highlight Overbought Conditions
The gold market is showing signs of being “hot,” with prices significantly above the 50-day moving average at $2,743.95. This technical setup often indicates an overbought market, heightening the risk of a pullback. Key support sits at $2,864.33—a break below this level could shift short-term momentum to the downside. Conversely, a move back through the $2,954.96 high would reinforce the ongoing uptrend.
Tariff Uncertainty Boosts Safe-Haven Demand
Trump’s newly proposed tariffs—including duties on lumber and forest products, alongside previous tariffs on imported cars, semiconductors, and pharmaceuticals—have kept market sentiment cautious. These measures add to the existing 10% tariff on Chinese imports and 25% tariffs on steel and aluminum. The threat of increased inflation from these policies could force the Federal Reserve to maintain higher interest rates, potentially curbing gold’s appeal as a non-yielding asset.
Physical Demand Weak in China and India
Despite gold’s strong performance, physical demand in key markets such as China and India remains weak due to the elevated price levels. The high costs have sidelined traditional buyers, suggesting the current rally is predominantly driven by investment and hedging demand rather than physical consumption.
Treasury Yields and Dollar Movement Add to Market Caution
U.S. Treasury yields edged lower as investors weighed the impact of Trump’s tariffs and awaited economic data, including existing home sales and the S&P Global PMI. Meanwhile, the U.S. dollar struggled near its 2025 lows, with traders wary of Trump’s tariff rhetoric and the Federal Reserve’s interest rate stance. The yen saw volatility, briefly breaking past the 150-per-dollar mark, before being reined in by the Bank of Japan’s bond-buying measures.
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See all Gold forecastsMarket Forecast: Caution Warranted for Bullish Traders
While the broader trend for gold remains bullish, the market’s current consolidation and overbought signals warrant caution. A sustained break above $2,954.96 could reignite buying momentum, but failure to hold the $2,864.33 support may lead to a sharper correction. Traders should monitor U.S. economic data and Federal Reserve commentary closely, as these factors could heavily influence gold’s next move.
More Information in our Economic Calendar.
