Gold price forecast May 7, 2025: Pressure eases before Fed meeting

World gold price today 5/7/2025

The world gold price (XAU) today is 3,390.78 USD/Ounce. The world gold exchange rate (XAU/USD) increased by 0.49% equivalent to an increase of 16.59 USD/Ounce in the last 24 hours.

World gold prices have adjusted sharply down, falling from a two-week high of $3,435/ounce, as investors took profits and positive expectations surrounding US-China trade negotiations weakened demand for shelter.

Market sentiment is now focused on the upcoming policy meetings of the US Federal Reserve (Fed), with Chairman Jerome Powell's speech set to determine gold's next move.

The White House’s confirmation that the US trade delegation will meet with the Chinese Vice Premier from May 9-12 in Geneva has created optimism, helping the USD recover and reducing the attractiveness of gold. In this context, investors have begun to reposition their portfolios in anticipation of new policy information, especially when expectations of a rate cut in June are fading after a series of positive economic data from the US.

According to Goldman Sachs and Barclays, the Fed is likely to delay the interest rate cut to July instead of June, while Mr. Powell may maintain a cautious tone, supporting a "wait and see" stance.

If the Fed admits that the US economy is recovering strongly, this could be interpreted by the market as "hawkish", causing the USD to increase in value and putting downward pressure on gold.

However, global geopolitical tensions continue to be a potential support for gold prices. In the Middle East, Israel is preparing to expand its military operations in Gaza, while Russia is also maintaining its ceasefire plan while warning of a response if Ukraine does not comply.

The situation in South Asia also escalated as India attacked targets in Pakistan, raising the risk of regional conflict.

The short-term trend of gold prices will depend largely on the message from the Fed. If the Fed signals a rate cut or shows concern about the economic outlook, gold prices could rebound.

Conversely, a tougher stance would put gold prices under further correction pressure. In any scenario, geopolitical factors will continue to play a role in keeping gold prices high.

Technical analysis of gold price on May 7, 2025

After failing to break above the key resistance level around $3,435, gold prices have reversed sharply lower and are now heading towards the initial psychological support level at $3,350. The rejection just below the old descending channel support line (now acting as resistance) suggests that the bullish momentum is facing significant resistance.

The next important support zone is at the 21-day SMA, near $3,283. If the sellers continue to dominate, gold could be pushed down to retest the May 2 low at $3,223. However, this possibility depends on the price action at the above technical support zones.

In terms of momentum indicators, the 14-day RSI remains above neutral, around 61.50, suggesting that the market is not yet truly oversold. This means that any short-term declines can still be viewed as “buying on corrections” opportunities within the larger uptrend.

To confirm a return to bullish momentum, gold would need to close above $3,435, its two-week high. The next target would then be $3,494, which is also the convergence zone between the rising channel resistance and the recent historical peak area.

In short, gold is correcting technically but has not broken the bullish structure yet. The $3,283 zone is the next “ground” to watch for a reaction. Bulls need to hold this zone and push the price above $3,435 to maintain the upside outlook to the $3,494 zone.