Gold (XAUUSD) Price Forecast: Can Dovish Fed Signals Reverse the Bearish Setup?

Gold Weakens as Trade Optimism, Dollar Strength, and Fed Uncertainty Cap Safe-Haven Demand

Gold retreated last week as firming trade sentiment, a stronger dollar, and a liquidity drain from China’s market holiday weighed on bullion. After briefly testing record territory above $3,500, prices pulled back sharply, driven by a combination of risk-on flows and growing doubt about near-term Fed easing.

The April U.S. jobs report, released Friday, showed modest hiring gains but not enough weakness to validate immediate rate cuts—leaving gold in limbo heading into a critical week for Fed policy clarity.

Last week, XAU/USD settled at $3240.95, down $78.39 or -2.36%.

XAU/USD closed lower for a second straight session last week, setting up a possible continuation of the weakness with a short-term pivot at $3166.46 the first target. This level is critical because if will either confirm or negate the “buy the dip” strategy. If the strategy is negated then prices could continue to fall over the near-term with $3018.52 the second target.

The swing chart indicates a trade through $2956.56 will be a sign of liquidation with the 52-week moving average at $2690.45 a major target. This is the major long-term support.

Dollar Gains and Trade Developments Pressure Bullion

The U.S. dollar gained ground last week, eroding gold’s appeal to non-dollar buyers. Currency strength was supported by improved global risk sentiment tied to trade negotiations.

The White House and Treasury signaled progress on bilateral trade agreements with key partners including India, Japan, and South Korea, while China paused tariffs on select U.S. imports. Although Beijing denied new talks were underway, the tone de-escalated, prompting investors to rotate out of defensive assets.

Thin Liquidity from China and Mixed U.S. Data Undermine Demand

With Chinese markets closed through May 5 for Labor Day, gold faced reduced buying interest from one of its top physical demand sources. TD Securities highlighted the impact of a “liquidity vacuum,” which intensified downward pressure.

At the same time, U.S. economic signals painted a mixed picture: GDP shrank by 0.3% in Q1 and core PCE was flat in March, while jobless claims rose to 241,000. Yet April’s jobs report offered just enough resilience to keep the Fed on the sidelines for now, limiting gold’s near-term upside.

Fed in Focus with Powell Set to Speak on Wednesday

This week, all attention turns to the Federal Reserve. The FOMC is expected to hold rates steady on Wednesday, but Chair Powell’s press conference may carry outsized impact. Political pressure has intensified, with President Trump and Treasury Secretary Bessent openly criticizing the Fed and urging preemptive cuts. However, with Friday’s jobs report showing no clear labor market deterioration, Powell may strike a cautious tone—potentially reinforcing higher-for-longer rate expectations unless inflation or employment data worsen.

Gold Prices Forecast: Bearish Near-Term Bias as Fed Holds the Line

Gold enters the week with a bearish tilt. A firmer dollar, muted physical demand, and reduced expectations for near-term Fed cuts are all headwinds. Unless Powell surprises with dovish guidance, bullion is likely to remain under pressure.

The broader macro picture—rising fiscal stress, policy uncertainty, and central bank accumulation—still supports long-term upside. But near-term, a lack of fresh catalysts favors sellers unless Fed rhetoric or incoming data reignites rate cut speculation. Traders should brace for volatility around Wednesday’s FOMC announcement and Powell’s post-meeting remarks.

More Information in our Economic Calendar.