Gold (XAUUSD) Price Forecast: Breakout or Breakdown? $3318.50 Pivot Holds the Key

Gold Eyes Resistance as Dollar Weakens and Trade Talks Loom

Gold prices moved higher Friday, holding just above the short-term pivot at $3318.50, a level that could determine whether XAU/USD reclaims the $3351.08 threshold or retreats toward deeper support levels. The week has seen choppy trading, with sentiment split between geopolitical risk and profit-taking after last month’s record high at $3,500.20.

At 11:31 GMT, XAU/USD is trading $3325.27, up $19.29 or +0.58%.

Dollar Weakness Gives Gold Temporary Tailwind

A softer U.S. dollar provided a modest lift to gold, with the Dollar Index (DXY) slipping 0.3% on Friday. While the greenback is still up on the week—thanks in part to optimism around a limited U.S.-UK trade agreement and fading Fed rate cut bets—the short-term dip made gold more appealing to foreign currency holders. Despite the minor pullback, stronger dollar trends have weighed on gold for most of the week, acting as a headwind and capping rallies.

Geopolitics and Trade Tensions Keep Bids Under Gold

Investor focus is shifting to the U.S.-China trade discussions set for the weekend in Switzerland. The possibility of reduced tariffs on Chinese imports has buoyed some optimism, but broader tensions—especially fresh military activity between India and Pakistan—are keeping gold supported as a geopolitical hedge. Central bank demand, tariff concerns, and financial uncertainty remain key undercurrents in the market, although strong rallies are being met with increased profit-taking.

Pattern Shift Hints at “Sell the Rally” Strategy

Technically, the May 1 low at $3201.95 tagged the major retracement zone of $3228.38 to $3164.23, satisfying a typical “buy the dip” setup. However, with a lower top now in place at $3435.06, gold appears to be transitioning into a “sell the rally” mode. If bulls fail to clear $3351.08, price risks sliding back into the retracement zone, with deeper support eyed at the 50-day moving average of $3130.40. This zone could become the next value area for longer-term buyers.

Gold Prices Forecast: Bearish Near-Term, Support Eyed Below $3200

With the market trading below a lower high and failure to decisively reclaim $3351.00, the near-term outlook for gold leans bearish. A close below $3318.50 would expose the $3228.38–$3164.23 retracement zone, with a further test of the 50-day MA at $3130.40 likely if sellers stay in control.

While safe-haven flows and trade risks support the broader bid, the technical setup now favors rallies being sold until a fresh breakout is confirmed. Traders should brace for a deeper pullback before renewed upside is considered.

More Information in our Economic Calendar.