Gold (XAUUSD) Price Forecast: Pullback After Record High Hints at Short-Term Cooldown

Pullback From Record High Signals Short-Term Cooling

Gold prices fell on Thursday after reaching a new all-time high of $3,357.77, as traders booked profits ahead of the holiday weekend. The retreat comes after Wednesday’s sharp 3.6% rally, driven by renewed concerns over U.S. tariff policy and inflation risk. While the broader trend remains bullish, the price action suggests the market may be overheated in the near term.

At 11:14 GMT, XAU/USD is trading $3329.68, down $13.42 or -0.40%.

Profit-Taking Hits After Record High

The pullback was largely technical, with some position-squaring and light profit-taking following the recent surge. Ross Norman, an independent analyst, pointed out that the reversal was likely driven by traders cashing in on the highs, noting that “price dips are well bought into, suggesting underlying sentiment is very positive.” Still, Thursday’s lower close signals that sellers briefly overwhelmed buyers at elevated levels.

Tariff Uncertainty and Fed Indecision Fuel Volatility

President Trump’s push for broader tariffs on critical mineral imports, along with probes into pharmaceutical and semiconductor sectors, has injected uncertainty into the inflation outlook. Fed Chair Jerome Powell acknowledged the inflationary risks of these policies on Wednesday but emphasized the need for more data before making any policy move. Powell warned the Fed could face conflicting objectives: controlling inflation while supporting slowing growth.

Yields Rise, Dollar Rebounds

Treasury yields pushed higher on Thursday, with the 10-year hitting 4.319% and the 2-year climbing to 3.815%, reflecting inflation concerns.

Meanwhile, the U.S. dollar firmed slightly, supported by euro weakness and stable trade dialogue with Japan. A stronger dollar generally puts pressure on gold, making it more expensive for foreign buyers.

Physical Demand Slows in Asia

Physical gold demand cooled in India and China as high prices deterred traditional buyers. While premiums in China remained steady, the rally appears to be driven more by macro concerns and speculative flows than by physical market support.

Market Forecast: Bullish Trend Intact, Short-Term Pullback Likely

Despite Thursday’s drop, the long-term trend in gold remains controlled by the 50-day moving average, now sitting at $3,004.97. That level continues to act as a key support, nearly $325 lower, anchoring the broader uptrend. Current selling appears corrective rather than a shift in direction. The outlook remains bullish over the longer term, but gold may consolidate near current levels before resuming its move higher.

More Information in our Economic Calendar.