Gold Price Forecast (XAUUSD)

6 Mayıs 2025

Gold Price Forecast (XAUUSD): A Calm Before the Fed Storm or the Start of a New Upward Trend?

Written by: Rania Gule, Senior Market Analyst at XS.com – MENA

Gold prices continue to maintain relative stability and modest gains amid a global environment increasingly marked by economic and geopolitical uncertainty. The precious metal remains above the $2,360 per ounce level, reflecting a delicate balance between safe-haven demand and pressure from financial markets. In my view, this fragile stability is merely a reflection of shifting expectations regarding U.S. monetary policy and rapidly evolving geopolitical developments, placing investors in a defensive stance as they await decisive events that could reshape the outlook for the coming period.

While gold lost some momentum at the start of Tuesday’s trading session, its ability to hold a bullish direction for the second consecutive day reveals underlying resilience in demand, despite a slight improvement in risk appetite. Recent developments in U.S.-China trade relations, while encouraging, still lack clarity and stability, particularly amid the unpredictable stances of U.S. President Donald Trump, which continue to generate persistent market uncertainty. In this context, I believe every positive signal from Trump is met with deeper concerns about potential sudden setbacks, making gold an attractive option for those seeking to reduce portfolio risk.

On the other hand, the U.S. dollar is showing noticeable weakness despite stronger-than-expected economic data, including a rise in the Services PMI to 51.6, indicating expansion in the sector. However, such data has not been enough to fully restore confidence in the U.S. economic trajectory, especially with growing trade threats from the Trump administration, such as the proposal to impose a 100% tariff on foreign cultural products. In my opinion, this type of policy undermines investor sentiment and heightens fears of entering a new phase of economic slowdown, justifying continued capital inflows into gold as a hedge.

Geopolitical tensions also play a pivotal role in supporting gold demand. They have escalated notably in recent days, with repeated Ukrainian attacks on Moscow and the closure of major Russian airports as a result, along with ongoing military operations in sensitive regions such as Kursk. Meanwhile, the increasing military tensions in the Middle East add a new regional dimension to the crisis, feeding instability in the region and reinforcing gold’s appeal as a risk-hedging asset.

Despite these supportive factors, investors do not appear ready to push gold prices significantly higher until there is clarity regarding the Federal Reserve’s upcoming decisions. The FOMC meeting, which begins today, is a pivotal moment, especially as market expectations for a rate cut in June have faded. I believe Fed Chair Jerome Powell will adopt a cautious approach, aiming to balance inflation control with avoiding an economic recession. This may lead to monetary policy remaining unchanged for longer than the markets hope, which would support continued consolidation in gold prices without necessarily triggering a sharp rally in the near term.

In summary, gold remains in a relatively comfortable position, benefiting from a weaker dollar and growing global risks. However, a true breakout above key resistance levels will likely depend on upcoming monetary and geopolitical signals. In my opinion, the most likely short-term scenario is that gold will stay within a sideways range with a gradual upward bias. More pronounced gains may follow if the Fed signals a shift toward monetary easing in the second half of the year or if geopolitical crises intensify to the point of directly impacting global growth and capital flows.

Amid the current complex intersection of economics and politics, gold continues to maintain its status as a strategic hedging instrument for both institutional and retail investors, particularly during periods of acute uncertainty, as is the case today. Even with daily fluctuations, the broader trend remains one of measured upside rather than impulsive rallies, until the market gains clearer visibility over the coming weeks.