• Gold forecast remains modestly bearish in the short term despite today’s rebound
• US-China tariff truce dampens safe haven appeal of gold, boosting risk assets
• Critical support eyed around $3,200, with deeper pullback likely if broken

After the big drop, gold prices rebounded around half a percent in the first half of Tuesday’s session, along with a 1.5% rise in silver prices. It remains to be seen if the rebound in precious metals will last. While the two metals usually go up and down together, I wouldn’t be surprised if silver manages to hold its ground amid a positive risk environment, while gold dips. Indeed, the gold forecast has taken a turn for the worse—at least in the near term. The US-China tariff truce sparked a risk-on rally across global markets on Monday, and while the dust hasn’t quite settled, today’s mild bounce in gold does little to shift the broader outlook. The yellow metal may have found its footing after a steep slide, but the mood remains wary. I reckon a deeper correction is now warranted before the metal starts trending higher again. That said, the longer-term bullish narrative hasn’t entirely unravelled. The rally that propelled gold upward began long before the tariff drama, rooted in macro themes such as sticky inflation, geopolitical tensions, and central bank uncertainty. These forces may be dormant now, but they’re not gone. Meanwhile, today’s US inflation data should not cause too much volatility.

Risk appetite remains firm

The latest détente between Washington and Beijing sent equity markets soaring and although index futures were a little soft today, the fact that risk on vibes were evident in other markets like crypto currencies, suggest defensive plays could be largely out of favour. As you may already know, US tariffs on Chinese imports were slashed following weekend talks from 145% to 30%, while China reciprocated, cutting its own levies from 125% to 10%. The relief was palpable. Traders piled into equities, the dollar firmed, and gold—predictably—was left out in the cold. It was a textbook reaction: optimism surged, the greenback gained ground, and safe havens faltered. Gold shed over 3% as investors rotated out of defensive assets. Today’s modest price recovery is more of a pause than a pivot back into gold, I reckon. For that reason, I think the gold forecast remains modestly bearish.

Technical gold forecast: key levels to watch

Source: TradingView.com

From a technical standpoint, the XAUUSD forecast remains a little on the bearish side of things. The price structure has turned tentative, with a couple of lower highs forming and key support at $3,200 repeatedly tested. The more a level is tested, the more likely it will give way. I reckon another dip today could potentially see a breach. If we do see a decisive breach of this level, then that could pave the way for a slide towards the next supports at $3,167, $3,150 or even $3,100. The long-term support area is around $3,000 to $3,020 zone (see the shaded area on the chart).

On the upside, resistance is stacking up near $3,269–$3,275. If bulls can force a close above that zone, there’s room to retest the next major ceilings at $3,360 and $3,400. A convincing move through these could put the record high near $3,500 back on the radar.

However, my base case scenario is that those resistance levels will hold and support will break first.

US CPI up next

The coming days could inject fresh volatility, with US CPI data today and the University of Michigan Consumer Sentiment reading both on tap. The rollback in tariffs may alleviate some inflationary pressure, which in turn could keep gold under the cosh if economic data starts to firm.

But let’s not forget: markets are fickle. While gold may be out of fashion for now, a shift in sentiment—be it from a sour turn in US-China talks, a few soft economic prints, or an unexpected geopolitical tremor—could bring safe havens back into vogue rather quickly.

Headline CPI expected to have remained unchanged at +2.4% y/y in April. A soft print would be bad news for the dollar, and potentially good for gold. The opposite is also true.

In summary…

In summary, the short-term gold forecast remains mildly bearish despite today’s minor recovery. Key support zones are holding for now, but momentum is lacking. Unless the bulls can reclaim lost ground swiftly, the path of least resistance appears downward. Still, for the longer-term gold enthusiast, this may yet prove to be a temporary detour rather than a change in direction.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R