Gold prices saw turbulent action in May 2025, with XAUUSD fluctuating between $3,120 and $3,435 per ounce. Despite the volatility, the precious metal ended the month virtually unchanged, securing a fifth consecutive monthly gain but failing to register a new all-time high—marking the first such miss since November 2024.
XAUUSD began May on a bearish note, briefly slipping nearly 9% mid-month. However, strong technical dip-buying and rising safe-haven demand reversed the losses, keeping the price comfortably above key 50-, 100-, and 200-day moving averages. A doji candlestick formed on the monthly chart, signaling growing trader indecision and hinting at a possible medium-term trend shift.
May’s Key Market Drivers
Early May Surge
Gold prices surged over 6% on May 5–6, as Chinese markets reopened after the Labour Day holiday. Additional upward pressure came from renewed trade war fears after U.S. President Donald Trump announced a 100% tariff on foreign films, weakening the U.S. dollar and boosting gold’s appeal to non-dollar holders.
Mid-May Pullback
Optimism over U.S.-China trade negotiations led to a gold sell-off. A temporary trade deal, announced on May 12, caused a 3% drop in gold prices and a continued decline over three sessions. Improved risk sentiment and U.S. trade agreements with Britain further pressured bullion.
Support and Recovery
On May 15, XAUUSD bounced back from the $3,150 level, triggered by pending buy-limit orders and dovish U.S. inflation data. This rebound was supported by soft PPI readings, fueling expectations of Federal Reserve rate cuts.
U.S. Debt and Tariff Tensions
Moody’s downgrade of U.S. debt and President Trump’s push for a new tax-cut bill intensified fiscal concerns, weakening the dollar and strengthening gold. On May 23, gold had its best week in six as tariff threats on EU goods and iPhones re-emerged. A U.S. appeals court reinstating Trump’s tariff policy on May 29 added further support.
“May was a wild ride for the gold market thanks to America’s erratic trade policies,” noted Kar Yong Ang, analyst at Octa. “Traders faced repeated changes in tariff implementation, creating uncertainty and suppressing clear directional trends.”
Macro & Technical Outlook for June 2025
Gold’s long-term trend remains bullish. XAUUSD continues to trade above key moving averages and trendlines, though recent price action shows signs of consolidation.
Geopolitical Risk
Persistent tensions in the Middle East, India-Pakistan skirmishes, and the ongoing Russia-Ukraine conflict underscore gold’s role as a geopolitical hedge. While cease-fire talks are underway, any resolution could improve risk sentiment and pressure gold. The looming July 8 tariff deadline adds another layer of uncertainty, especially as most U.S. trade negotiations remain incomplete.
Monetary Policy & Inflation Outlook
Rate cuts are widely expected. Market pricing suggests up to 75 bps of Fed rate reductions by year-end, with the ECB and BoE expected to follow suit. However, inflation remains a wildcard. Tariff-related cost increases could force central banks to maintain higher rates for longer, limiting gold’s upside.
Physical Demand Trends
Physical gold demand continues to support prices. China’s April imports via Hong Kong tripled month-over-month to 58.61 metric tons, their highest in over a year. The People’s Bank of China has added to its reserves for six straight months, with holdings now at 2,295 metric tons. Central banks worldwide added over 240 tons of gold in Q1 2025.
China may further increase imports to offset a strengthening renminbi, while seasonal slowing in India is expected to be temporary. Meanwhile, Swiss customs data showed record U.S. gold imports, underscoring how tariff exemptions are reshaping bullion flows in Western markets.
Speculative Positioning
According to CFTC data, large speculators remain net-long on COMEX gold, with 152,034 long contracts versus 34,797 short. Physically backed ETF flows totaled nearly 50 metric tons year-to-date, though recent weeks have seen outflows, suggesting reduced speculative enthusiasm.
“Gold is still a buy, but no longer a screaming buy,” said Ang. “The bullish trend is showing signs of exhaustion. While a significant drop appears unlikely, consolidation seems probable in the near term.”
Technical Levels to Watch
According to Octa, upside targets remain at $3,397, $3,438, and the $3,463–$3,471 zone. A drop below $3,125 would weaken the bullish case, potentially shifting the market into a broader consolidation phase rather than a full reversal.
Conclusion
Gold’s long-term fundamentals remain strong—central bank buying, macro uncertainty, and dovish policy expectations all support higher prices. However, traders should approach June with caution. With seven major central bank rate decisions and ongoing trade developments, the month could prove pivotal in setting the direction for gold for the rest of 2025.
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