Gold forecast: XAU/USD still not out of woods despite big bounce

Over the past couple of days, gold has staged a sharp rebound, climbing roughly 15% from the lows near $4,400 seen in the immediate aftermath of Monday’s follow-on heavy sell-off from last week. Impressive on the surface, yes. But it’s worth remembering this bounce follows an even more aggressive decline. The big question now is whether this calmer spell is simply setting the stage for another leg lower. For me, the near term gold forecast is far from bullish.

 

 

Analysis: gold still on shaky ground

 

There’s no denying the bounce has been punchy. After such a brutal sell-off, some kind of reaction was always likely. That said, I think it’s far too early to start talking about a durable bottom.

 

For me, this still looks like a counter-trend rally rather than the start of a fresh bullish phase. The scale of the recent decline has almost certainly altered sentiment, and once markets go through that kind of reset, they rarely recover in a straight line. I’d be surprised if we don’t see another bout of selling in the near term.

 

Gold had effectively been a one-way trade for months, before falling close to 20% peak to trough. Positioning was crowded, momentum was stretched, and eventually something had to give. What we’ve just seen feels like the first proper trend reversal in precious metals.

 

Moves of that magnitude don’t get repaired overnight, and is therefore far too early to declare an end to the near-term bearish gold forecast.

 

Yes, dip buyers have shown up around the $4,500 region, and the rebound has been swift. But from a structural point of view, meaningful technical damage has already been done. After swings like this, markets usually need time to consolidate – and that process often involves further downside along the way.

 

Until the charts prove otherwise, I’m treating this rally as corrective, not the beginning of a new bull run.

 

Gold: key technical levels

 

Technically speaking, the decisive break below the psychological $5,000 mark was significant. Not just because it’s a round number, but because of how fast and forceful the move was.

 

 

At the moment, gold spot prices appear to be climbing within a short-term rising wedge formation – a pattern that often acts as a bearish continuation rather than a bullish signal.

 

On the upside, resistance sits around $5,000, with further supply likely near $5,100. These levels now look like areas where sellers may be keen to fade strength.

 

For confirmation on the downside, I’d be watching the lower boundary of that rising wedge. A break below it could open the door to another swift move lower.

 

In terms of support, there’s some around $4,900 and then near $4,800, but the key level remains $4,500. That’s still the main line in the sand for now.

 

Gold forecast: Fundamentals losing some shine

 

From a macro perspective, some of the factors that powered gold higher earlier in the year are starting to lose momentum.

 

Much of the bullish narrative centred on US monetary policy uncertainty and expectations of deep rate cuts. That tone shifted after Donald Trump named Kevin Warsh as the next Fed chair – a move markets took as relatively hawkish.

 

The immediate impact was a firm rebound in the US dollar, which is rarely a positive development for gold.

 

A stronger dollar tends to act as a headwind for precious metals, and if this move turns out to be more than a short-lived bounce, it could continue to weigh on gold prices.

 

Even today’s weaker-than-expected ADP jobs data failed to derail the dollar’s recovery. Attention now turns to the delayed official US jobs report, expected sometime next week.

 

Add in firmer oil prices – which generally favour the US over energy-importing economies like the eurozone – and the dollar’s resilience starts to make more sense.

 

More broadly, the US economy simply doesn’t appear to be slowing as quickly as markets had anticipated. As a result, expectations for aggressive rate cuts have been pared back. Without a clear negative shock in the data, it’s still difficult to build a convincing bearish case for the dollar.

 

Looking ahead, the focus shifts to ISM services PMI, expected to ease slightly to 53.4. Earlier this week, ISM manufacturing surprised on the upside at 52.6 – its first expansionary reading in a year – reinforcing the idea that US growth momentum may be quietly improving.

 

Geopolitics offering less support

 

On the geopolitical front, tensions have eased somewhat. Fears around a potential US–Iran confrontation have cooled, oil prices have softened, and some of the safe-haven demand that supported gold is beginning to unwind.

 

All told, despite the recent bounce, this still feels like a sell-the-rallies environment for gold – at least until the technical picture starts to look more constructive. For that reason, we maintain a near-term bearish gold forecast.

 

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

 

 

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