Gold Slumps Below $3,200 as Safe-Haven Appeal Fades and Technicals Turn Bearish

Gold prices are tumbling, with the precious metal dropping to around $3,180 and heading for a weekly loss exceeding 4%, the steepest since November 2024. Having shed over $300 from its April peak of $3,500, gold is grappling with fading safe-haven demand and intensifying technical selling. The decline reflects a shift in market sentiment, driven by easing global tensions and a focus on profit-taking, as investors reassess the metal’s role amid evolving economic and geopolitical dynamics.

A key factor behind gold’s retreat is the reduction in safe-haven demand. The U.S. and China’s agreement to lower tariffs for 90 days has bolstered risk sentiment, while geopolitical risks have eased with stabilized conditions in the Middle East and India-Pakistan relations. Additionally, direct talks between Ukrainian and Russian officials—the first since 2022—have further diminished the need for gold as a protective asset. These developments have shifted investor focus away from safe-haven buying, contributing to the metal’s sharp pullback.

Recent U.S. economic data has also influenced market dynamics. The University of Michigan’s Consumer Sentiment Index for May plummeted to 50.8, down from 52.2 in April and below expectations of 53.4, signaling growing consumer unease over persistent inflation and economic uncertainty. Despite softer-than-expected Consumer Price Index and Producer Price Index figures, alongside a rise in initial jobless claims to a three-month high, gold failed to capitalize on its traditional appeal as a hedge. Instead, markets are pricing in at least two Federal Reserve rate cuts in 2025, potentially starting in September, though warnings of possible inflation volatility due to supply shocks have tempered expectations.

From a technical perspective, gold’s outlook remains bearish. The metal has fallen below the critical $3,200 level, with a double top pattern on the daily chart signaling a potential trend reversal from April’s highs. The $3,160–$3,150 support zone, aligned with the 50-day Exponential Moving Average at $3,168, is under pressure. A break below this could pave the way for a deeper slide toward $3,000. The Relative Strength Index, lingering near 45, underscores waning bullish momentum. Without a strong push above $3,250, gold’s downward trajectory appears set to continue, with investors bracing for further volatility as economic and geopolitical developments unfold.