Gold continues to trade cautiously and remains biased to the downside in the short term, as the market has yet to find enough momentum to form a clear recovery.
The main pressure still comes from expectations around Fed policy, with interest rates likely to stay elevated for longer than previously anticipated.
This keeps the opportunity cost of holding gold high, limiting the appeal of the precious metal.
The U.S. dollar also remains relatively stable, with the DXY hovering around 100.6–100.8, while the 10-year U.S. Treasury yield stays elevated near 4.5%.
The combination of a resilient dollar and high real yields continues to create a significant headwind for gold, especially as short-term capital flows tend to favour yield-bearing assets over non-yielding ones.
At the same time, easing geopolitical risks have also reduced part of the demand for safe-haven assets. Gold had previously been supported by defensive positioning, but as tensions temporarily cool, safe-haven buying is no longer strong enough to sustain upside momentum. Meanwhile, gold ETFs recorded outflows in May, suggesting that financial investment demand for gold has yet to recover in a sustainable way.
These factors are acting as barriers to gold’s upside expectations in the short to medium term. With the Fed not yet sending a clear easing signal, the U.S. dollar remaining steady, and Treasury yields holding at elevated levels, gold may continue to face correction pressure or trade within a narrow range as it searches for a new equilibrium.
However, from a longer-term perspective, the broader picture for gold has not turned entirely negative. Central banks continue to buy gold as part of their reserve diversification strategy, while the desire to reduce dependence on the U.S. dollar remains a structural trend. This provides an important fundamental support for gold’s long-term appeal, even as the market goes through a short-term correction phase.
Therefore, I believe gold remains tilted to the downside in the near term. If pressure from the Fed, the U.S. dollar, and Treasury yields persists, the current correction could drag prices back toward the 4,000 USD/oz area. This is an important psychological level and could serve as a key test of medium-term buying interest. If gold decisively loses this level, selling pressure may intensify and open the door for the correction to extend toward lower support areas. Conversely, if buyers step back in around 4,000 USD/oz, the market may enter a consolidation phase before attempting to rebuild more sustainable recovery momentum.