Gold price forecast for the week of May 19-25: Continued price decrease, market depends on Fed's statement and PMI data

Gold prices lose momentum as geopolitics ease and USD recovers slightly

Gold prices (XAU/USD) fell sharply last week, falling to their lowest in more than a month at $3,120 an ounce as traditional supportive factors such as geopolitical uncertainty and inflation concerns faded.

The decline mainly started at the beginning of the week, when the US and China reached a temporary trade agreement, causing a wave of flight from safe-haven assets.

In addition, tensions between India and Pakistan, as well as Russia and Ukraine, have shown signs of easing. These factors have all reduced demand for risk protection, negatively affecting gold, which is considered a safe haven in times of uncertainty.

Gold prices get slight support from US inflation data

Despite a sharp drop at the start and middle of the week, gold recovered somewhat thanks to weaker-than-expected US economic data. The CPI and PPI for April were both lower than forecast, suggesting that consumer and producer inflation are easing.

In addition, the consumer confidence index fell and inflation expectations among the people increased, reflecting concerns about the economic outlook. These factors put pressure on the USD and supported gold in the last sessions of the week.

However, the gold price movement is still quite cautious. Gold price ended the week above the threshold of 3,200 USD/ounce and has not been able to escape the adjustment zone.

Gold price forecast next week: Downward pressure remains present, depending on Fed's statement and PMI data

Moving into the week of May 19-25, gold prices will be strongly influenced by statements from US Federal Reserve (Fed) officials as well as preliminary US PMI data on Thursday.

If the PMI index shows that the manufacturing and service sectors continue to weaken (below 50 points), the USD may be sold off, thereby creating momentum for gold to recover.

Conversely, if Fed officials signal more hawkishness, such as cutting rates less than the market expects, the dollar could regain momentum, putting further pressure on gold. Currently, the market is betting on an 80% chance of at least two rate cuts this year, but any change in policy stance could quickly reverse the trend for gold.

Technical analysis of gold price from May 19 to 25

Technically, gold is below the important support level of $3,160/ounce, which coincides with the 50-day moving average and the 38.2% Fibonacci retracement level of the uptrend from December. This is considered a clear warning signal for a deeper correction cycle.

If the price continues to weaken below the $3,160/ounce zone and fails to reclaim this level, the next target could be the $3,045 zone, the 50% Fibo level, and further to the strong psychological support zone of $3,000 - $2,980/ounce.

On the other hand, the immediate resistance zone is around 3,290 - 3,300 USD/ounce. Breaking this threshold will be an opportunity for gold to re-approach the 3,360 USD zone and even 3,430 USD, the high point of previous recoveries.

The RSI indicator has dropped below the 50 level, reflecting that selling pressure is still present, while the technical structure is breaking out of the rising channel since December, suggesting that the corrective trend is dominant in the short term.