Gold forecast: XAU/USD takes technical bounce but more pain likely near-term

Gold and silver have bounced off their overnight lows, tracking a weaker US dollar. The precious metal didn’t immediately respond to news of a surprise drop in monthly PPI reading, which weighed on the dollar when it was released. In fact, I don’t think macro data for April matters too much, given everyone is now watching whether the US and China will reach a comprehensive trade deal after the two sides slashed their tariffs on each other at the weekend. One other factor that may have helped gold prices today was news Putin wasn’t travelling to meet Trump in Turkey for peace talks, increasing haven demand slightly. All told however, with the recent improvement in risk appetite causing stocks to surge higher, haven demand for gold is not the same as before. The gold forecast is thus not as strong, and we may see a dip to around $3K before dip-buyers step back in.

Gold forecast remains soft despite rebound

With no major bearish headlines dragging stocks down, the mood in markets has shifted decisively upbeat—and that’s bad news for gold. The biggest macro mover right now is a warming in US-China trade relations. Both sides are rolling back tariffs, and negotiations may well be going somewhere. That’s given investors some breathing room. Add to that this week’s softer-than-expected US inflation data, with both CPI and PPI undershooting forecast, and suddenly, worries that Trump’s tariffs might unleash a fresh inflation wave have been reduced, if not completely cooled off. That being said, long-term yields are not coming down much and this is something to keep an eye, which may worry the Fed as well.

Technical levels to watch

Source: TradingView.com

Technically, the price of gold looks vulnerable after making its first lower low and lower high. As I had pointed out the possibility, gold went on to breaks that $3,200 support zone, which is now in the spotlight as potential resistance. In fact, it is the area around $3,193 to $3,216, which may act as a barrier now, after we break cleanly below it. That breakdown initially saw gold dip to a low so far of $3,120. Should the selling resume and we go below that level, then $3,100 is the next objective, followed by $3,022 and maybe even the big psychological level at $3,000.

The long-term trend is still intact, but in the short run the bearish pressure might have a bit more room to run despite today’s bounce from the trend line.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.