Gold Holds Key Support but Risk of Breakdown Lingers Beneath Surface
Satendra Singh | May 19, 2025 04:17AM ET
On analyzing the movements of the gold futures in different time charts, I find the gold futures look ready to slide to test last week’s lows to form a double bottom under the impact of currently growing concerns on different fronts.
Undoubtedly, a breakdown below the immediate support at $3210 could push the gold futures to test the next support at $3089. Still, any breakdown below this significant support is likely to continue this slide this month.
I anticipate that the surging weakness in the U.S. dollar due to a surprise downgrade of the U.S. government’s credit rating amid trade frictions concerns could extend the safe haven demand for some more time, but the impact of President Donald Trump’s aggressive trade policy could also be supportive for an uptrend in gold futures.
On the other side, technical formations in the different time charts presents a bearish picture for the gold futures as the gold has lost its haven potential as a haven due to extremely higher prices, could face a surge in money outflow from gold to other safe havens like Japanese Yen and the Bitcoins which are likely to remain bullish as the U.S. lawmakers blocked a bill proposed by President Trump to extend the tax cuts he implemented during his first term in 2017.
Undoubtedly, such a scenario extends confusion among the investors who look for a better safe haven option amid surging stagflation fear hovers around with surging inflation and slow economic growth, while the current fiscal deficit in the U.S stands at $1.05 trillion.
I anticipate that the U.S. dollar index is under bearish pressure due to the formation of a bearish crossover in the weekly chart while trading below the 9 DMA in the weekly chart despite a bouncing move from the lower levels at 97.665 in Apr. 2025.
On analysis of the BTC/USD index look ready for a rally despite the formation of bearish formation after testing this week’s high at $107081 due to the formation of a bullish crossover with an upward move by 9 DMA above the 20 DMA, above the 50 DMA, but I anticipate that this rally looks ready to lose steam as the BTC/USD is near the levels of forming a double top before the advent of fresh selling spree that could push it to test the significant support at $80762.
Technical Levels to Watch
Get The News You Want
On analysis of the movements of the gold futures in the weekly chart, gold futures are teetering at a pivotal point to defend the immediate support at 9 DMA, after testing a significant support at $3122 during the last week, followed by this week’s bearish doji formation that could push the gold futures back to the pavilion if does not sustain above this week’s high at $3253.
I anticipate that if the gold futures do not hold the immediate support at 9 DMA at $3220, gold futures could test the next support at 20 DMA at $3033 shortly.
Inversely, any bouncing move above the significant resistance at $3344 will provide a good opportunity for gold bulls to load fresh shorts with a stop loss at $3373.
In the daily chart, gold futures have hit the first target, set by me a long time back for May 14, 2025, and the gold futures are still trading amid significant bearish pressure that could push the gold futures to test the second target at $2968 this month.
Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based only on observations.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.