KUALA LUMPUR, MALAYSIA — June 5, 2025 — May proved to be a turbulent month for gold traders. The price of gold, measured by the XAUUSD, fluctuated between $3,120 and $3,435 per ounce but ended the month nearly unchanged. This marked the fifth consecutive monthly gain, though the gains were narrow.
The month began with a bearish tone as gold prices slipped below $3,200. However, support around this level helped gold rebound. Despite this recovery, gold struggled to break above the key $3,430 resistance, triggering a short-term downturn that saw prices fall nearly 9% by mid-May. Later, technical buying and strong safe-haven demand helped gold recover, keeping it above its 50-, 100-, and 200-day moving averages. Yet, May was the first month since November 2024 without a new all-time high for gold. The monthly chart formed a strong doji candlestick, suggesting market indecision and a possible mid-term reversal.
Market Drivers and Key Events
Gold’s rollercoaster ride in May was shaped by a series of major events. Investors faced ongoing trade uncertainties, shifting geopolitical tensions in the Middle East and Eastern Europe, changing monetary policy expectations, rising U.S. recession fears, global debt concerns, and a weakening U.S. dollar. Throughout, gold held its role as a safe-haven asset, hinting at possible positive performance ahead.
Highlights include:
- May 5-6: Gold jumped over 6% in two days. China’s markets reopened after Labor Day holidays, boosting demand. Meanwhile, President Trump’s announcement of a 100% tariff on foreign films intensified trade war fears, weakened the dollar, and made gold more attractive to non-U.S. investors.
- May 7-12: Gold pulled back from $3,430 amid hopes for eased trade tensions. Upcoming talks between U.S. Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng in Geneva, plus a ‘breakthrough’ trade deal between the U.S. and Britain, boosted the dollar and pressured gold prices. A temporary U.S.-China trade deal announcement on May 12 sent gold down by about 3%, with further declines in the following sessions.
- May 15: Gold found support near $3,150, sparking buying that lifted prices by nearly 2%. Softer U.S. Producer Price Index (PPI) data fueled expectations of Federal Reserve rate cuts, supporting gold.
- May 20: Moody’s downgrade of U.S. debt and ongoing U.S. tax cut debates weakened the dollar. Gold climbed toward $3,300.
- May 23: Renewed U.S. tariff threats, including a proposed 50% tariff on EU imports and a 25% tariff on iPhones made outside the U.S., sent gold up almost 2%, marking its best week in six.
- May 29: Gold rebounded after a U.S. appeals court reinstated Trump’s tariffs, reversing a recent trade court ruling.
“May was a wild ride due to America’s unpredictable trade policies,” said Kar Yong Ang, financial analyst at Octa Broker. “Since Trump’s tariff announcements in April, policies have been delayed, challenged, and reversed repeatedly, creating confusion and leaving traders uncertain.”
Technical Trends and Investor Sentiment
The XAUUSD chart shows a strong doji for May, signaling indecision among traders. Since April 22, the short-term trend has been sideways as investors await clearer direction. However, the long-term trend remains bullish, with prices comfortably above key moving averages.
Physical demand has supported gold’s strength. China’s gold imports via Hong Kong nearly tripled in April to 58.61 metric tons, the highest in over a year. The People’s Bank of China has added gold reserves for six months straight, reaching 2,295 metric tons. India and Russia also continue to accumulate gold. Octa estimates that central banks globally added over 240 tons of gold to reserves in the first quarter of 2025.
U.S. trade policies influenced gold flows in the West as well. Swiss customs data show record gold imports from the U.S. after tariff exemptions on precious metals, reflecting traders’ efforts to hedge against potential tariffs.
Speculative investors remain net-long on gold futures and options, though their exposure has shrunk since last September’s U.S. election uncertainty. Physically backed gold ETFs have seen strong inflows this year but recorded minor outflows in early May.
Looking Ahead: Key Factors Shaping Gold in 2025
- Geopolitical Risks: Ongoing trade negotiations between the U.S. and China, Middle East conflicts, and tensions in Eastern Europe continue to create uncertainty. Progress toward ceasefires could reduce gold’s safe-haven appeal. Upcoming U.S. tariff deadlines add complexity.
- Monetary Policy: Markets expect the Federal Reserve and other central banks to cut interest rates later this year, which supports gold prices by lowering opportunity costs. However, inflation remains a concern, possibly delaying rate cuts.
- Physical Demand: China’s gold buying remains strong, aided by yuan appreciation concerns. India’s demand may slow temporarily due to seasonal factors but is expected to recover.
Technical Outlook
Kar Yong Ang notes, “Gold’s technical outlook remains bullish. Key resistance levels at $3,397, $3,438, and $3,463-$3,471 are targets for bulls. Only a drop below $3,125 would threaten this trend, but even then, sideways movement is more likely than a sharp decline.”
Conclusion
Gold’s outlook remains generally positive but less exuberant than in late 2024. Wall Street forecasts, such as Goldman Sachs’ target of $3,700 per ounce, point to upside potential driven by strong central bank demand. Still, uncertainty over U.S. trade policies and cautious investor positioning suggest volatility ahead.
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