Gold prices declined by 0.5% to around $3,213 per ounce on Tuesday, May 20, 2025. This correction was driven by two main factors: the strengthening US dollar and growing optimism surrounding a Russia–Ukraine ceasefire, which reduced demand for gold as a safe-haven asset.
Market Drivers
- Stronger US Dollar: The dollar rebounded from weekly lows, making gold less attractive for foreign investors as prices in USD become more expensive.
- Easing Geopolitical Tensions: Hopes for peace between Russia and Ukraine weighed on gold’s appeal as a hedge, even though global risks have not fully subsided.
- US Credit Downgrade: Moody’s downgraded the US credit rating to “Aa1” due to fiscal concerns. While its immediate impact on gold has been limited, it remains a long-term factor to watch.
Impact of Trade War and US–China Sentiment
In addition to the main factors above, the US–China trade war has resurfaced as a key issue. Despite a 90-day pause, uncertainty remains high. China’s pressure from US bond sell-offs adds further tension. This scenario could weaken equities and, conversely, support gold prices in the medium term.
Technical Analysis and Expert Outlook
According to ICICI Bank Global Markets, gold is expected to trade between $3,050 and $3,250 throughout Q2 2025. If selling pressure continues, key support levels lie at $3,201, $3,153, and $3,119.
Billionaire analyst David Einhorn argues that the recent surge in gold prices is not driven by inflation, but rather by declining confidence in US fiscal and monetary policy—particularly due to budget deficits and a lack of spending discipline.
Other Opportunities in the Market
Investors are advised not to focus solely on gold. The Hang Seng Index shows upside potential toward 28,000, while the Nasdaq may climb to 25,000. In equities, Amazon and Apple are displaying bullish technical signals—Amazon in an uptrend and Apple forming an inverted head and shoulders reversal pattern.
Conclusion and Recommendations
Gold is currently in a consolidation phase, pressured by a stronger dollar and easing geopolitical tensions. However, US fiscal risks, trade war concerns, and the possibility of Fed rate cuts offer potential support going forward.
For investors and traders:
- Monitor geopolitical developments and Federal Reserve policy closely.
- Watch key technical levels ($3,200 and $3,150).
- Diversify into forex and stocks showing short-term opportunities.
Final advice: build a flexible trading plan that can adapt quickly to the fast-changing and dynamic market environment.
