Gold Slips Below $3,200 as Geopolitical Calm and ETF Pause Shake Market

Gold prices dipped below the $3,200 per ounce threshold on Wednesday, May 14, 2025, at 08:28 PM +04, as a pause in Chinese exchange-traded fund (ETF) inflows, combined with optimistic geopolitical developments, triggered a market pullback. The decline follows a period of robust gains, but analysts suggest that sustained demand from central banks and a reluctance among major investors to heavily short the metal could limit further downside, creating an uneven risk profile. This shift comes amid a backdrop where the US-China trade truce, while initially a challenge for gold, has not spurred the expected wave of selling, highlighting the metal’s complex dynamics in the current market environment.

The pullback appears linked to a sudden halt in Chinese ETF flows, which had been gaining momentum in recent sessions, alongside positive news from the Russia-Ukraine front that has reduced demand for safe-haven assets. This combination has exposed gold to a sharp correction, breaking through its recent support level. Market observers note that the US-China 90-day tariff suspension, reducing duties to 30% on Chinese imports and 10% on US goods, was a scenario least favorable for gold, as it diminished trade-related uncertainties that typically bolster precious metals. However, the scale of subsequent selling has been surprisingly restrained, suggesting underlying resilience.

Despite the current dip, the market outlook remains cautiously optimistic, with central bank purchases continuing to provide a solid foundation to counterbalance any outflow from retail ETF investors in both Western and Eastern markets. Analysts argue that this imbalance reflects a subtle shift, where the US Dollar is gradually losing its traditional role as a primary store of value, even as it retains its status as the world’s reserve currency. This dynamic supports an asymmetric trade scenario, where downside risks are mitigated by institutional inertia and ongoing official sector demand, potentially setting the stage for a rebound if geopolitical tensions resurface or economic data shifts.

As gold hovers near $3,200, its next move will likely depend on the interplay of these factors, including any renewed ETF inflows or changes in global risk sentiment. The metal’s ability to hold above key support levels, bolstered by central bank buying, suggests that while short-term pressure persists, the longer-term outlook may favor stability or even recovery. With markets digesting the latest geopolitical and trade developments at this late hour, gold’s trajectory remains a focal point for investors navigating an evolving economic landscape.