This weekly gold outlook was written when London’s session finished on Friday. The bond market turmoil deepened on Friday, and this triggered a wave of selling across financial markets. We saw zero-yielding assets like gold and especially silver take a big drop as rising yields increased the opportunity cost of holding the metals. Looking ahead to the new week, there is not an awful lot of data to potentially cause a reversal in the trend. So, oil prices should be a good guide for market direction and sentiment. Rising oil will be bad for the gold outlook.
Surging yields triggered risk off on Friday
Friday was a risk off day for markets. The US 10 year yield climbed above 4.55% for the first time since May 2025, and after weeks of euphoria in the AI trade, investors decided it was the right time to sell technology and other growth stocks. It was not just US yields that rose. Big moves have been observed in Japan and the UK too, suggesting the oil rally is creating a lot of inflation and investors are thus demanding higher yields in return for holding government debt.
Indeed, investors have now fully priced out the probability of a Federal Reserve rate cut with the central bank’s next move likely to be a hike. That could cause issues such as loan delinquencies, which has already been surging in the auto industry.
Meanwhile, a great deal of hope had been pinned on the Trump-Xi meeting delivering at least a handful of constructive headlines — not just on trade, but potentially on Iran too. Instead, the absence of meaningful progress left risk sentiment exposed.
Last week, we also had a run of hawkish US data with CPI and PPI both rising much more sharply than expected.
Investors are thus becoming increasingly uneasy about the scale of government borrowing across developed economies and what persistently elevated yields could mean for growth prospects, debt servicing costs, and broader financial conditions.
Rising yields also support the view that underlying price pressures remain far stickier than policymakers — and markets — had hoped. It is likely that companies will either have to absorb higher costs through weaker margins or pass them on to consumers, keeping inflationary pressures alive deeper into the cycle.
Technical gold outlook
At the time of writing, late on Friday, gold was still holding near its session lows following a sharp drop of around 2.5%.
Key support comes in at $4,500 on XAUUSD chart, marking the previous low from 4 May. That level will be crucial because, below it, there is not much in terms of support until $4,400. Beneath that, the 200-day moving average comes in at $4,342. Should those levels break, then the market may eye the March low just below the $4,100 level next.
In terms of resistance, the key level to watch is $4,660. This level has acted as both support and resistance in the past. Last week, gold tested this area several times — on Monday, Tuesday, and again on Thursday — before breaking decisively below it on Friday. Therefore, for as long as gold remains below this level, the path of least resistance is likely to remain to the downside.
