Gold (XAUUSD) Price Forecast: Can the Market Rebound After Worst Week Since November?

Gold Drops Sharply as Trade Truce and Firm Dollar Spark Safe-Haven Exodus

Gold recorded its worst weekly performance since November, sinking over 3.6% to settle near $3,204.45, as safe-haven demand collapsed under the weight of improving U.S.-China relations and a strengthening dollar. After hitting all-time highs last month, bullion faced heavy liquidation as traders unwound hedges in response to de-escalating geopolitical risk and fading expectations for aggressive Federal Reserve easing.

U.S.-China Tariff Deal Triggers Massive Futures Liquidation

The driving force behind gold’s reversal was the joint decision by Washington and Beijing to implement a 90-day pause on most tariffs. The U.S. slashed duties from 145% to 30%, while China reduced its own from 125% to 10%. This agreement, framed as a pathway to ending the long-standing trade war, revived global risk appetite and removed a major tailwind for gold.

The liquidation was swift. As investor demand for defensive positioning evaporated, futures traders aggressively took profits on long positions. Kitco’s Jim Wycoff described the move as a “week-long wave of liquidation” triggered by shifting headlines and declining fear premiums.

Dollar Strength Resurfaces, Undercutting Gold’s Appeal

At the same time, the U.S. dollar logged its fourth straight weekly gain, eroding gold’s competitiveness for non-dollar holders. The dollar was buoyed by firmer import prices and a jump in consumer inflation expectations, which surged to 7.3%—a sign that price pressures may linger even as CPI cools. These developments lifted Treasury yields and reinforced the greenback’s edge over non-yielding assets like gold.

While some economic data underwhelmed, including consumer sentiment figures, the overriding theme was one of renewed dollar demand and falling hedging interest. Gold struggled to attract bids in this environment, with ETF demand showing signs of stalling and physical markets softening as well.

Fed Rate Cut Expectations Linger, But Traders Look to Fresh Data

Markets continue to price in two rate cuts before year-end, likely starting in September, but conviction behind those bets is fading. Last week’s retail sales and producer price index (PPI) data offered little urgency for policy easing, with spending showing modest resilience and wholesale price pressures remaining contained.

Now, trader attention turns to upcoming Fed commentary and broader inflation dynamics. With inflation expectations climbing despite softer headline CPI, markets are looking for clarity on whether recent dovish tones from policymakers will harden into action—or give way to a more cautious stance as economic conditions stabilize. For gold, the absence of a clear Fed pivot could limit upside potential and sustain bearish pressure.

Gold Prices Forecast: Bearish Outlook Extends Into Next Week as Dollar Strength and Risk Appetite Persist

Heading into the new week, the gold prices forecast remains bearish. While April’s core CPI reading came in softer than expected, longer-term consumer inflation expectations surged to 7.3%, muddying the outlook for Federal Reserve policy. This split in inflation signals limits the case for immediate rate cuts and keeps the dollar supported—both of which weigh on gold.

Institutional interest in bullion remains subdued as traders reassess the likelihood of near-term Fed action. Retail sales and PPI data showed enough resilience to keep growth concerns at bay, while sticky inflation expectations may force policymakers to stay cautious. Without a decisive dovish pivot or renewed geopolitical stress, gold is likely to remain under pressure.

Unless upcoming Fed commentary pushes back clearly against rising real rates or reaffirms a near-term policy shift, capital rotation toward risk assets and away from gold will likely persist. With safe-haven demand cooling and inflation uncertainty elevated, gold faces continued headwinds in the short term.

Technically, XAU/USD is still in an uptrend, but momentum has shifted to the downside.

A sustained move under the pivot at $3166.46 is likely to extend the selling pressure this week towards the next major pivot at $3018.52.

Traders are expected to continue to buy the dips into support, but unlike previous similar moves, they are being met by traders selling the rallies.

The major support is the swing bottom at $2956.56. If this price fails then look out to the downside with the 52-week moving average at $2707.24 the next like target.

More Information in our Economic Calendar.