After Thursday’s significant rally, gold prices faced a sharp correction on Friday, falling back below the critical $3,200 level. This decline came amid a strengthening US Dollar and easing geopolitical tensions, both of which have dampened demand for the safe-haven metal. As a result, the XAU/USD pair remains under pressure and is on track to post its biggest weekly loss of the year.
Technical Analysis: Resistance at the 200-Period Moving Average
From a technical standpoint, the recovery from a one-month low has stalled near the 200-period Simple Moving Average on the 4-hour chart, around the $3,252–$3,255 zone. At the same time, daily oscillators continue to flash negative signals. Therefore, confirmation of a bullish reversal requires stronger buying momentum and price stabilization above key levels.
In the short term, if gold fails to hold above the $3,200 mark, the next support area lies near $3,177–$3,178. A break below this region could accelerate selling pressure and push prices down toward the recent low around $3,120. Further downside may target the psychological $3,100 level, followed by a more critical support zone near $3,060.
On the upside, initial resistance remains at the $3,252–$3,255 area. A strong break above this range could trigger a wave of short-covering and pave the way for gold to reclaim the $3,300 level. Sustained strength above that point could shift the near-term outlook from bearish to bullish, opening the door to further gains.
Fundamental Factors: Political Calm and Dollar Strength
On the fundamental side, easing geopolitical tensions—particularly between Russia and Ukraine—have weighed on gold. Russian President Vladimir Putin did not personally attend a recent international summit and instead sent lower-level delegates, a move seen as diplomatically dismissive toward Ukraine. This led to a strong reaction from world leaders, some of whom threatened harsher sanctions to pressure Russia into negotiations. Meanwhile, markets await comments from US President Donald Trump, who reportedly disapproves of the current situation.
Despite this uncertainty, the US Dollar continues to face challenges. According to Mark Haefele, Chief Investment Officer at a major Swiss bank’s wealth management unit, ongoing volatility in US risk assets and the dollar may encourage international investors to hedge their dollar exposure and diversify their portfolios—making gold a favorable option for risk management.
Moreover, progress in US-China trade talks has reduced safe-haven demand, adding further downside pressure on gold. Still, analysts believe that in such an uncertain environment, gold remains a crucial risk hedge—particularly for investors with dollar-denominated liabilities seeking to preserve asset value.
Conclusion
Despite the recent correction and both technical and fundamental pressure on gold, geopolitical developments, monetary policy shifts, and dollar movements can still significantly influence the metal’s direction. In the near term, traders should closely monitor key support and resistance zones and avoid aggressive positioning until a confirmed breakout or reversal is observed.
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