Gold prices began last week with strong growth but subsequently failed to consolidate above the $3,400 mark. As a result, prices began sliding back to their initial levels and now risk dropping to the support level of 3,280. The six-month upward trend line is approaching, and sellers of the yellow metal will certainly want to test its strength. Both technical and fundamental factors contribute to this outcome.
Gold's appeal to traders has waned ahead of today's talks between US and Chinese delegations in London. According to experts surveyed by Reuters, a full-scale trade agreement is unlikely, but any signs of progress would negatively impact safe-haven assets. In this context, Reuters analyst Wang Tao sees a high probability of gold falling to $3,296 or $3,262 per ounce.
Cooling demand for gold is also evident in the ETF market. The World Gold Council (WGC) reported the first decline in investments in exchange-traded funds in 2025. Over the last month of spring, more than $1.8 billion was withdrawn from ETFs, equivalent to 19 tons of gold. Approximately 80% of those funds were pulled from North America, where traders switched to buying cheaper stocks and reduced their gold holdings.
Reduced gold consumption may soon be exacerbated by a growing supply. Metals Focus predicts that global gold production will increase by 1% in 2025, almost reaching 3,700 tons. Additionally, metal recycling may maintain last year's strong performance, when its volume surged 11% to 1,368 tons. However, due to excessively high prices overall gold demand will fall by 9%, including a 16% drop in the jewelry industry.
The Stochastic indicator on the daily gold chart has reversed downward from the overbought zone, confirming the sell signal. The nearest target for bears is the 3,280 level.
Consider the following trading strategy:
Sell gold in the range of 3,320–3,340. Take profit — 3,280. Stop loss — 3,390.
This content is for informational purposes only and is not intended to be investing advice.
