Gold forecast: XAU/USD weighed down by reduced haven demand
While the long-term gold forecast remains positive, in the near-term some further weakness should not come as surprise, particularly if stocks continue rising and the metal breaks a key bullish trend line that has consistently provided a floor in 2025.
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The price of gold has fallen over 1.2% so far in today’s session and the metal is down 2.4% on the week. The precious metal is also turning flat on the month after closing unchanged in May, too. The loss of bullish momentum has been triggered by a few factors, including profit-taking, but most importantly it is this: reduced haven demand. While the long-term gold forecast remains positive, in the near-term some further weakness should not come as surprise, particularly if stocks continue rising and the metal breaks a key bullish trend line that has consistently provided a floor in 2025.
Risk assets rally, causing gold to falter
Thanks to the sudden de-escalation in the Israel-Iran conflict, investors have rushed back to the racier tech sector, which has helped to push the Nasdaq 100 to new highs. The loss of haven demand has meant that despite the latest leg down in the dollar, gold has not benefited from this at all. I reckon a bit of a pullback would not be too bad an outcome as that will allow long term technical overbought conditions on higher time frames to work off, allowing the metal to shine again when macro conditions are more favourable once more. The upcoming PCE index should not have too significant of an impact on gold as long as the data doesn't hurt risk appetite. Next week’s key US macro data including the latest nonfarm jobs report should have at least some influence.
Technical gold forecast: XAU/USD testing 2025 trend line
Source: TradingView.com
The price of gold is now testing its 2025 bullish trend line around $3280 area, making this a key level to watch today. A close below it would be a bearish technical development, in which case a deeper correction in early July would be a likely scenario towards some of the levels I have marked on the chart. However, a positive close today, or at least a finish around the $3,300 mark would keep the bulls in charge. The metal would still need to take out $3340 resistance to ignite fresh momentum on the long side, given the current price structure.
All told, consolidation continues to remain the name of the game for now. But the technical gold forecast could turn bearish should we see a close below the bullish trend line.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
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