Gold News: Dollar Strength Triggers Gold Pullback—Will Bulls Regain Control?

Gold Prices Forecast: Rally Stalls as Overbought Conditions Trigger Pullback

Gold prices closed lower for a second straight session on Friday, pulling back from record highs after an explosive eight-day rally added $177 to the metal. Spot gold fell 1% to $3,014.36, while U.S. gold futures dropped 0.7% to $3,021.80. Despite the retracement, bullion still posted a 0.7% weekly gain, supported by safe-haven flows and Fed rate cut expectations.

Technical Pullback Targets Key Support Levels

The current move lower is widely viewed as a technical correction rather than a trend reversal. After reaching an all-time high of $3,057.59 on Thursday, gold entered overbought territory, triggering profit-taking ahead of the weekend. Initial support is seen at the $2,968.92 pivot. A break below this level could open the door to the 50-day moving average at $2,867.68—a key trend indicator that has guided the rally since early January. To confirm a renewed bullish push, gold must reclaim and close above $3,057.59.

Dollar Strength Weighs on Gold in the Near Term

A firm U.S. dollar added to selling pressure, with the DXY index rising 0.2% to a two-week high. The stronger greenback makes dollar-denominated gold less attractive to foreign buyers. This comes as Fed policy expectations continue to support the broader gold outlook. Markets are pricing in 71 basis points of rate cuts this year, with a 25-basis-point reduction fully priced for July, according to LSEG data.

Safe-Haven Flows Still Underpin Long-Term Strength

Geopolitical risks remain a key driver. Israel escalated its military campaign in Gaza, ending a two-month ceasefire, while U.S.-China trade tensions linger. These events continue to fuel defensive allocations into gold, reinforcing its role as a portfolio hedge during periods of uncertainty. The metal has already notched 16 record highs this year.

Gold vs. Equities: Divergence Suggests Consolidation Ahead

Gold has outpaced U.S. stocks by 24% over the past three months—the widest gap since March 2022. Historically, such divergence has preceded equity rebounds and mild gold consolidations. SentimenTrader data shows that after similar spreads, gold often underperforms over the next few weeks as capital rotates back into risk assets.

Gold Market Outlook: Short-Term Pullback, Long-Term Bullish

The gold market appears poised for a near-term correction, with $2,968.92 and $2,867.68 as key downside levels to watch. However, the broader uptrend remains intact, supported by dovish Fed expectations and persistent geopolitical tension. As long as gold holds the 50-day moving average, the long-term gold prices forecast remains bullish.

More Information in our Economic Calendar.