Gold’s Momentum Stalls as Risk Appetite Grows. Forecast as of 09.05.2025 | LiteFinance
Rising global risk appetite and the Fed’s reluctance to lower rates are limiting gold’s upside potential. However, central banks’ gold purchases and ongoing political uncertainty are bolstering the XAUUSD pair. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The Fed will not cut rates at least until July.
- The de-escalation of trade conflicts is putting pressure on safe-haven assets.
- Central banks continue to buy precious metals.
- Consider trading gold in the range of $3,100–3,400.
Monthly Fundamental Forecast for Gold
Gold has found itself in a challenging position amid shifting market sentiment. The US administration is working hard to portray progress in trade talks, and the Fed intends to maintain the federal funds rate at 4.5% for an extended period, which is putting pressure on safe-haven assets. Nevertheless, even the slightest display of Donald Trump’s unpredictability or aggressive rhetoric is enough to cause a surge in the XAUUSD pair.
Ongoing political uncertainty and expectations that the slowing US economy may eventually trigger a recession and force the Fed into aggressive monetary policy easing are preventing a deeper decline in gold. Any correction will likely remain limited to the range of $3,000–$3,100 per ounce.
Gold is also being supported by a growing central bank appetite for the precious metal. China has increased its gold reserves for six consecutive months, adding around 30 tonnes over the period. However, the precious metal still only accounts for 8% of the country’s total foreign exchange reserves. If the People’s Bank of China wants to raise this to the developed world average of 20% amid an escalating trade conflict, it would have to buy 40 tonnes of gold a month for three years.
China’s Gold Reserves
Source: Bloomberg.
The de-escalation of trade conflicts and the Fed’s hesitation to cut interest rates until at least July are exerting pressure on the XAUUSD pair. But why would the Fed act this way if its decisions are influenced by the White House’s impact on the U.S. economy? Once Washington’s 90-day tariff reprieve expires, the cycle of monetary expansion can resume.
If the signs of a recession appear by that time, gold may regain its momentum. For now, however, increased global risk appetite and the Fed’s inaction are capping the XAUUSD pair’s upside potential within the $3,400–$3,500 range.
US Fed Rate Expectations
Source: Bloomberg.
The main long-term scenario for gold suggests consolidation in the range of $3,100–3,400 per ounce. A breakout beyond this range, followed by a return to these levels, may provide an opportunity to open trades.
The $3,300 mark is expected to serve as a key level for gold in the near term. Whether it stays there or falls below it will depend on the outcome of the US-China trade negotiations. A more conciliatory stance from the US would signal a de-escalation of trade tensions and could intensify downward pressure on gold. In contrast, if China resists pressure to negotiate on unfavorable terms, renewed tensions may drive the XAUUSD pair toward the $3,400 mark and higher.
Monthly Trading Plan for Gold
The previous strategy to buy gold on a rebound from $3,200 has proven successful. Now, traders should prepare for a medium-term consolidation. Consider opening long trades once a false breakout of the support of $3,100 occurs and short trades if the asset fails to pierce the resistance of $3,400.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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