Gold Prices Decline Could Be Set on Pause

Gold prices fell sharply this week by 2.0% to $3,286 per troy ounce, extending the decline to as much as 3.3% at the weekly low of $3,245 — near the critical support zone at $3,230–3,250. This area has proven technically and psychologically significant, marking a key battleground for bulls and bears. The major driver of volatility has been U.S. trade policy. After initially rallying on renewed tariff threats from President Trump, gold reversed sharply when a U.S. Federal court blocked those tariffs, ruling they exceeded presidential authority. Although the Trump administration filed an immediate appeal, the uncertainty surrounding tariff enforcement significantly reduced gold's safe-haven appeal, sending prices back down. Hawkish tones from the FOMC Minutes reinforced expectations of policy caution, boosting the U.S. Dollar and further pressuring gold. The DXY surged 0.8% to its highest since May 19, while 10-year Treasury yields briefly climbed before retreating — a classic headwind for non-yielding assets like gold.

Interestingly, institutional sentiment may be shifting. Last week, the SPDR Gold Trust (GLD) recorded $388.3 million in net inflows, ending a four-week streak of outflows. With these positions showing a 5.0% gain as of last Friday, large investors might reassess their stance following the tariff reversal. Looking ahead, the second estimate of U.S. Q1 GDP is expected on Thursday and is likely to confirm a 0.3% QoQ contraction. This would be broadly neutral for gold unless a significant deviation occurs. On Friday, the Fed’s preferred inflation gauge — the Core PCE price index — will be released. A softer-than-expected print would weaken the Dollar and support gold prices. With expectations of disinflation, the release could become a bullish pivot for precious metals.

From a technical perspective, prices are likely to consolidate within the $3,250–3,350 zone in the short term, especially as legal clarity over tariffs is awaited. A decisive breakdown below $3,230 could open the path toward the broader downside target at $3,030–3,050. On the other hand, a strong bounce and close above $3,350 would negate the bearish momentum and potentially set up a retest of the $3,400–3,450 region. Gold remains in a vulnerable technical posture, weighed down by shifting macro signals and legal-political uncertainty. Traders are likely to wait for clearer signals on both the court ruling's durability and upcoming macro data before making strong directional bets. Near-term, range-bound trading between $3,250 and $3,350 appears most likely, with a bearish bias persisting unless new catalysts favor gold.