Gold Price Forecast: XAU/USD retreats from records, now what?

Valeria Bednarik FXStreet

XAU/USD Current price: $5,248

A slide in the tech sector amid concerns about AI investment sent markets into a panic.
Overstretched Gold partially corrected extreme overbought conditions, broad USD weakness helps it bounce.
XAU/USD shed roughly $500 per troy ounce in the American session, bulls pause, but still present.

Gold price rallied early on Thursday to a fresh all-time high of $5,598, as persistent US Dollar (USD) weakness persisted. Financial markets, however, took a dramatic turn in the American session, and the bright metal plummeted towards the $5,100 region, with major slides also among indexes. After wiping out billions, the XAU/USD pair quickly recovered roughly $150 and currently trades at around $5,250.

As for the USD, it managed to recover uneven ground across the FX board, firmer against commodity-linked rivals, yet weaker vs. the safe-haven Japanese Yen.

Wall Street's sharp slump due to a sell-off in the tech sector partially explains the recent market movements, but not completely. Microsoft Corp. shares fell to their lowest in six-years after the company reported record spending in the last three months of 2025, spurring concerns it will take longer than expected for the company’s AI investments to pay off.

But Gold’s decline could be also expBut Gold’s decline could also be explained by the extreme overbought conditions after nine consecutive record highs.ained by the extreme overbought conditions after nine consecutive record highs. The XAU/USD pair rose roughly 30% just in January, and some profit-taking as the month-end looms added to the latest slump. It’s still worth noting that the bright metal retains over 20% of its monthly gains at the time of writing.

XAU/USD short-term technical outlook

The XAU/USD pair's sharp intraday slump appears corrective, and there is no technical signal confirming an interim top. The pair may well resume its advance after a period of consolidation, although further slides below the $5,000 mark may force additional profit-taking and result in a much steeper decline.

In the 4-hour chart, the pair briefly pierced the 20-period Simple Moving Average (SMA), which, anyway, remains far above the 100- and 200-period SMAs. The 20-period SMA has partially lost its bullish stance and currently stands at $5,235.95, providing nearby dynamic support. At the same time, the Momentum indicator aims higher, whitin positive levels, while the Relative Strength Index (RSI) indicator bounced from its 50 line and currently sits at 53.

Technical readings in the daily chart show XAU/USD continues developing far above all its moving averages, with a sharply bullish 20-day SMA standing at $4,735, too far to be relevant. The longer moving averages maintain their upward slopes below the shorter one, in line with the dominant bullish trend. Technical indicators retreated sharply from extreme readings, holding on to overbought territory, with the RSI indicator currently sitting at 77.

(The technical analysis of this story was written with the help of an AI tool.)

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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