Too Early to Count Gold Out. Forecast as of 25.06.2025
The recent ceasefire in the Middle East, brokered by Donald Trump, has delivered a sharp blow to gold’s safe-haven appeal. However, support from central banks and other factors have helped contain panic among XAUUSD traders. Let’s discuss these topics and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The truce between Israel and Iran has pushed the XAUUSD price lower.
- Central banks plan to increase the share of gold in their reserves.
- The US Fed does not rule out a rate cut in July.
- If gold falls below $3,295, consider adding to short trades.
Weekly Fundamental Forecast for Gold
Gold has lost a key geopolitical advantage but hopes to gain a new one. As the 90-day US tariff reprieve nears its end, rising uncertainty is likely to bolster demand for safe-haven assets. Сentral banks’ strong appetite for bullion, coupled with differing opinions within the Fed regarding the timing of rate cuts, gives XAUUSD bulls solid reasons to remain steadfast.
A recent survey by the WGC and YouGov revealed that a record 43% of central banks plan to expand their gold purchases over the next 12 months, up from 29% last year. Most respondents anticipate an increase in global gold reserves.
Global Gold Reserve Growth Forecasts
Source: Bloomberg.
Goldman Sachs is optimistic that the XAUUSD pair will rally to 4,000 thanks to strong regulatory interest. However, while bears were cautious in April, the medium-term consolidation has emboldened them. Citigroup forecasts a drop in gold prices to below $3,000 per ounce by 2026, citing positive global economic growth projections. Additionally, Donald Trump’s recently announced tax cut plan could significantly impact the business landscape. If approved by Congress, it is expected to bolster the US GDP.
If the US economy and labor market remain resilient, the Fed will have no reason to lower the federal funds rate. Jerome Powell stated that accelerating inflation and robust job growth will allow the central bank to extend its pause in the monetary expansion cycle. However, the Fed chair did not rule out another option in his speech to Congress. If the FOMC notices that inflation weakens and the labor market is cooling, there will be an opportunity to ease monetary policy sooner.
Market Expectations for the Fed Rate
Source: Bloomberg.
The sooner the Fed resumes rate cuts, the better for gold. Therefore, dovish comments from FOMC officials, calling for a restart of the monetary easing cycle as early as July, gave the XAUUSD pair as much support as the Israeli-Iranian conflict. Once tensions de-escalated, investor demand for safe havens faded, causing gold to retreat.
As observed in April, gold tends to respond more favorably to uncertainty rather than to tariff shocks. Following the US Liberation Day, gold prices declined, but a 90-day delay on tariffs announced by the White House quickly propelled the XAUUSD pair to record highs.
Weekly Trading Plan for Gold
Gold is overbought but still has its advantages. This limits the asset’s room for significant moves in either direction. Thus, consider opening new short trades if the price breaks through the support of $3,295, adding them to those initiated at $3,400. Long trades can be considered if gold pierces the resistance of $3,370.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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