XAUUSD on a daily timeframe.
Gold experienced a sustained uptrend from late January through early April 2025, with a sequence of higher highs and higher lows, peaking near the 3440 level. The trend was supported by strong bullish momentum, with minor consolidations above the 50-day moving average (green line). The most notable pullback occurred in early April, when price dipped to retest the 3171 support area before resuming upward.
Recent price action shows a recovery from the 3171 support, with a rebound back toward the 3300 level. However, this rebound occurs under a lower high structure, suggesting possible waning bullish strength. A clear failure swing pattern can be observed, with resistance now pressing downward from the 3440 peak toward the recent rejection near 3300. Despite the bullish candles in the last few sessions, the inability to breach 3300 decisively casts doubt on trend continuation in the short term.
Technical indicators provide mixed signals. The Relative Strength Index (RSI) is at 56.83, showing modest bullish momentum but not in overbought territory. Meanwhile, the stochastic oscillator is signaling overbought conditions, printing values above 90 with a potential bearish crossover forming—highlighting the risk of a corrective pullback. Price remains above the 50-day, 100-day, and 200-day moving averages, which confirms medium- to long-term bullish alignment. However, the hidden bearish divergence between price action and the stochastic oscillator indicates a possible loss of upward momentum.
The primary scenario favors a potential short-term pullback, particularly if the price fails to breach the 3300 resistance level with conviction. In this case, a retracement toward the 3171 support is likely, with a possible bounce near the 50-day moving average. Should that level break, the next downside target lies near the 2972 region, where the 100-day moving average aligns with a previous consolidation area.
An alternative scenario would be a breakout above 3300, which could invalidate the divergence and attract fresh buying interest. A daily close above this level opens the path to retest the 3440 high. If that resistance is surpassed, the uptrend could resume with targets beyond 3500, especially if supported by dovish macroeconomic catalysts or weakening U.S. dollar strength.
Gold prices have been influenced by a combination of geopolitical tensions, fiscal concerns, and shifting monetary policy expectations over the past five days. On May 16, Moody’s downgraded the U.S. sovereign credit rating from "Aaa," intensifying fears over the $34 trillion debt load. This was followed by the House’s advancement of President Trump’s $3–5 trillion tax-cut and spending bill, which spurred deficit concerns and contributed to a weak 20-year Treasury auction on May 21, driving the U.S. Dollar to a two-week low. Simultaneously, China’s condemnation of U.S. sanctions on Huawei’s AI chips escalated trade tensions, while continued conflict in Gaza and warnings on Ukraine policy from Trump increased safe-haven flows. Monetary policy expectations have tilted dovishly, with markets now pricing in a greater than 50% chance of late-2025 rate cuts, further weakening the dollar. Gold reached a two-week high of $3,346 on May 22, helped by a break above the $3,250–3,255 resistance zone. Looking ahead, Flash PMI data, U.S. jobless claims, and existing home sales on May 23, along with any developments on the tax bill vote or Fed comments, will shape gold’s next move. Fiscal instability and geopolitical risks continue to support the bullish bias.
SUMMARY:
- Gold peaked near $3,440 but now struggles below $3,300, forming a lower high and failure swing.
- RSI is neutral at 56.8; Stochastic is overbought with bearish crossover risks.
- Key support levels: $3,171 and $2,972; a break below may trigger deeper pullback.
- Geopolitical risks, U.S. fiscal stress, and dovish Fed outlook support safe-haven demand.
