Gold Price Forecast: XAU/USD down but not out as key $5,140 support holds
- Gold consolidates the advance to monthly top of $5,250 in Tuesday’s Asian trades.
- The US Dollar finds demand as liquidity returns and risk sentiment recovers, despite US tariffs uncertainty.
- Gold defends 61.8% Fibo resistance at $5,142 amid the pullback, daily RSI remains bullish.
Gold is testing bids under the $5,200 level early Tuesday, consolidating the uptick to one-month highs of $5,250. Buyers seem to have taken a breather after four back-to-back trading days of gains.
Gold pauses before the next push higher
With Chinese and Japanese markets re-opening, optimism has returned alongside liquidity, allowing the US Dollar (USD) to breath a sigh of relief.
Markets resorted to ‘sell America’ trades after the tariff confusion sparked by US President Donald Trump over the weekend, which sapped investors’ confidence.
The sell-off on Wall Street extended on Monday in the face of uncertainty over Trump’s tariffs, rising geopolitical risks and nervousness ahead of the Artificial Intelligence (AI) pioneer Nvidia’s earnings report on Wednesday.
Gold snapped its four-day winning streak on modest USD rebound, testing the critical $5,142 support on pullback from monthly highs.
Markets continue to pay close attention to the tariff headlines, especially after the Wall Street Journal (WSJ) reported early Tuesday that Trump's administration is mulling new national security tariffs on a half-dozen industries after a Supreme Court decision last Friday that nixed many of his second-term levies,
Additionally, geopolitical risks also remain in play as tensions keep simmering between the United States (US) and Iran.
Also, throw in the persistent expectations of atleast two US Federal Reserve (Fed) interest rate cuts this year, and these factors will likely keep any downside cushioned in the traditional store of value, Gold.
Furthermore, Gold remains supported due to robust investment demand for Gold from India, despite record highs prices, per Money Metals Exchange.
Gold price technical analysis: Daily chart
The 21-day Simple Moving Average (SMA) rises above the 50-, 100-, and 200-day SMAs, with all slopes advancing, underscoring a firm bullish bias. Price holds above these trend markers, with the 21-day SMA at $5,029.61 offering nearby dynamic support. The 14-day RSI prints at 59.50, just above the midline, reinforcing steady upside momentum.
Measured from the $5,597.89 high to the $4,401.99 low, price steadies between the 61.8% retracement at $5,141.05 and the 78.6% retracement at $5,341.96, with the latter capping gains. A daily close above the 78.6% retracement could open the path toward the prior high, while rejection there would risk a pullback toward the 50-day SMA at $4,742.30. As long as price respects the short-term averages, the near-term tone favors an extension within the retracement band before a directional break develops.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
