Gold Analysis: Is XAU/USD losing its shine?

The trading session has not been favorable for gold. The metal is down more than 1.00% on the day and has moved back below the key $4,500 area, highlighting a short-term weakness that is becoming increasingly clear.

Selling pressure appears to be linked to the strength of alternative safe-haven markets, especially bonds. In this environment, gold has lost some of its relative appeal, as fixed income yields continue to offer a more competitive alternative for market participants. If this backdrop persists, XAU/USD could remain under pressure over the coming sessions.

The bond market remains gold’s main rival

In the current market environment, investors remain concerned about possible inflationary pressures for the rest of the year. This has supported expectations that some central banks could begin shifting away from stable rates and toward a more restrictive policy stance.

In the United States, for example, probability tables show that markets expect rates to remain unchanged until December 2026. However, by early 2027, there is already a probability above 40% that the benchmark rate could rise from the current 3.75% toward the 4.00% area. This suggests that market participants are beginning to price in the possibility of a more aggressive Federal Reserve over the next few months.

Source: CMEGROUP

These expectations have allowed global bond markets to maintain elevated yields, strengthening their appeal relative to gold. In the United States, 10-year Treasury yields remain near 4.5%; in Canada, yields are around 3.5%; and even in Japan, they remain above 2.6%. Beyond the specific levels, the key point is that yields have started to recover again in recent sessions, increasing the relative attractiveness of these instruments in the short term.

Source: TradingEconomics

This has not been supportive for gold. Bonds remain one of the metal’s main substitute assets, especially because gold does not offer yield. When fixed income returns rise, part of the demand for safe-haven assets can shift toward bonds, leaving gold in a less attractive position.

This loss of appeal is also starting to show up in gold futures activity. Trading volume has declined in recent sessions, and on June 2, just over 100,000 contracts were traded, one of the lowest readings since mid-May. This suggests a meaningful slowdown in market activity and confirms that, for now, conditions are not ideal for stronger gold demand to stabilize in the short term.

Source: CMEGROUP

Overall, stronger bond markets and lower futures activity may be weighing on appetite for gold. If bonds continue to offer attractive yields and capture demand as a substitute market, XAU/USD could continue to face relevant selling pressure over the coming sessions.

 

Is gold losing its safe-haven appeal?

It is also important to note that risk sentiment deteriorated again during today’s session after new updates around potential US tariffs. The new plan includes tariffs on several countries, starting around 10% and potentially reaching 12.5%, bringing renewed concerns over global trade stability.

This decline in confidence is already visible in the Fear and Greed Index for financial markets, which fell toward the 54-point area. With this move, the index returned to “neutral” territory for the first time in several weeks, pointing to a loss of short-term optimism.

Source: CNN

In previous months, gold often benefited when confidence indicators weakened, given its role as a traditional safe-haven asset. This time, however, conditions appear to be different. Despite the deterioration in market confidence, gold continues to trade with weakness, suggesting that the metal is not currently the main destination for defensive flows.

This may indicate that capital is still moving toward other substitute assets, particularly bonds, which offer more attractive yields. For this reason, if weaker market confidence continues to favor other safe havens instead of gold, selling pressure on XAU/USD could remain in place over the coming sessions.

 

Technical outlook for gold

Source: StoneX, Tradingview

• The bearish trend continues to dominate: Although gold attempted to recover in previous weeks, the move was not strong enough to challenge the long bearish trendline that has been in place since March. For now, this remains the dominant technical structure. If selling pressure continues to stabilize, this formation could remain the main pattern to watch over the coming sessions.
   

• RSI: At the moment, the RSI remains below the neutral 50 level, indicating that bearish momentum continues to dominate the average of the last 14 sessions. If the indicator keeps moving lower, it could continue to support a consistent selling bias over the medium term.
   

• TRIX: A similar dynamic can be seen in the TRIX, with the indicator line still below the central 0 level. This suggests that the average strength of long-term moving averages continues to reflect a relevant selling bias, which could remain important over the next few sessions.
   

Key levels to watch:

• 4,755 USD – Crucial resistance: A recent high located above the 50-period moving average and aligned with the 50% Fibonacci retracement of the most relevant move on the chart. A move toward this area could put the long-term bearish trend line at risk and open the door to a more relevant buying bias.
   
• 4,600 USD – Near-term barrier: A neutral area that has acted as a retracement point in recent weeks and coincides with the 38.2% Fibonacci level. Price action around this zone could reinforce a sideways phase and even open the door to a short-term range in XAU/USD.
   
• 4,378 USD – Critical support: A relevant low that coincides with the area marked by the 200-period simple moving average. A break below this level could confirm a dominant selling bias and extend the bearish trendline as the main structure over the coming weeks.
   

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25