Gold prices have entered a phase of correction after reaching record highs earlier this year, marking the first consecutive weekly losses in 2025. The downturn reflects a convergence of easing geopolitical tensions, a firmer U.S. dollar, and shifting market expectations ahead of the U.S. Federal Reserve’s key policy announcement scheduled for this week.
Global Factors Driving Gold Price Movements
Traditionally seen as a safe-haven asset during economic uncertainty, gold has recently experienced selling pressure. The easing of U.S.–China trade tensions, alongside signs of progress in negotiations with India, Japan, and South Korea, has led to a pullback in investor demand for bullion. At the same time, the U.S. dollar has strengthened after retreating from three-year lows, further weighing on gold prices.
A temporary liquidity squeeze due to China’s market holidays added to bearish sentiment in the bullion market. Meanwhile, mixed signals from U.S. economic indicators have created further ambiguity: the latest employment report showed modest job growth, not enough to prompt imminent rate cuts, yet rising jobless claims and a 0.3% contraction in Q1 GDP have stirred concerns about the underlying health of the U.S. economy.
In China, officials have paused select tariffs on U.S. goods but deny the resumption of formal trade talks, injecting further uncertainty into investor sentiment. Amid this backdrop, gold continues to hover in a cautious zone, reflecting the market’s wait-and-watch stance.
Outlook for Gold Prices This Week
Despite recent declines, sentiment around gold remains tentatively optimistic. U.S. President Donald Trump’s comments suggesting progress with China lacked concrete details, and while Beijing has acknowledged receipt of U.S. proposals to restart talks, it has set conditions for any further negotiations. Such geopolitical ambiguity could keep safe-haven demand for gold intact, particularly at lower price points.
All eyes are now on the Federal Reserve’s Federal Open Market Committee (FOMC) meeting this week. Analysts widely expect the central bank to hold interest rates steady, but commentary from Fed Chair Jerome Powell could sway market direction. Political pressure has mounted, with both Trump and Treasury Secretary Bessent urging the Fed to consider preemptive cuts. However, with labor data showing no significant deterioration, the Fed is likely to maintain a cautious tone, reinforcing expectations of a prolonged high-rate environment unless inflation or employment dynamics worsen.
Traders should anticipate heightened volatility around the FOMC announcement. Analysts suggest gold may trade within a range of $3,205 to $3,390 per ounce over the course of the week.
Trading Strategy: Gold Buy/Sell Recommendations
For short-term investors, a tactical buy-on-dip strategy is recommended. Market experts advise accumulating MCX Gold (June delivery) near the current levels of ₹94,500 per 10 grams, with opportunities to enter at dips around ₹93,500 to ₹93,000.
A stop-loss should be placed below ₹92,300, targeting a recovery to ₹96,500–₹96,800 per 10 grams. This approach aims to balance upside potential with downside risk amid uncertain macroeconomic cues.
As always, investors are encouraged to stay informed, monitor global economic developments closely, and align their strategies with personal risk profiles and financial goals.
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