Weakening gold demand to drive prices down to $3,200

Gold prices surged this month, outpacing gains in other asset classes. The rally was driven by investors seeking to reduce the risks tied to Donald Trump’s tariff policies. However, some market analysts are now urging caution. Hedge fund managers have slashed their net long positions in gold to the lowest level seen in the past year.

As trade tensions between the US and its partners cool, demand for the traditional safe-haven asset has begun to wane. The dollar's recent strength has added to the downward pressure. US Treasury Secretary Scott Bessent confirmed that several major trading partners have proposed mutually beneficial arrangements to avert tariffs. India is expected to be among the first to secure a trade deal. Meanwhile, China's decision to lift tariffs on certain American goods signals a clear de-escalation after the trade war had raised serious concerns about a potential US recession.

Following its steepest decline in three years, the US dollar index rose 0.95% against major currencies, driving gold prices higher for foreign buyers.

Consumption of the precious metal in China dropped almost 6.0% year-over-year in the first quarter of 2025 to 290.492 tons, according to the China Gold Association. The slump comes as soaring prices have cooled interest in gold jewelry, pushing buyers toward investment-focused products like bars and coins instead.

The UK’s Royal Mint reported record-breaking online sales of investment coins in the first quarter. Revenue from gold coin sales surged by 306% year-over-year. With gold prices skyrocketing past $3,300 an ounce, investors have turned to more affordable alternatives, including platinum coins and digital silver.

As of April 30, the RSI on the daily chart stands at 66, down from 74 on April 29. Now hovering near overbought territory, the RSI suggests a potential shift toward selling pressure.

Trading Strategy: sell at the current price. Take Profit – 3,200. Stop Loss – 3,400.