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Gold (XAU/USD) prices are under pressure as global market sentiment shifts. The yellow metal has experienced a sudden drop, reflecting accelerating selling pressure. Risk-on sentiment and a stronger US Dollar have dampened gold's appeal. Improving trade relations and macroeconomic shifts have investors eyeing alternative assets. Meanwhile, ETF flows and global mining activities continue to reshape bullion demand.
 

Gold Drops on Weaker Yen, Strong Dollar, and Delayed EU Tariffs

The recent fall in gold prices reflects a broader shift in global investor sentiment. Gold is trading lower, showing a decline of over 1.5% on the day. This pullback is closely tied to a strengthening US Dollar. The USD gained sharply after Japan’s Ministry of Finance signalled a potential reduction in bond issuance, which led to a drop in Japanese yields. This led to a weaker Yen and strengthened the US Dollar against major currencies, exerting additional pressure on gold prices.

Stronger trade signals are also reducing gold’s appeal as a hedge. President Trump’s decision to delay the 50% EU tariff until July 9 raised hopes for a favourable trade resolution. This optimism has encouraged risk-on behaviour in global markets, decreasing demand for safe-haven assets like gold. Meanwhile, investor interest in gold-backed ETFs is fading. After strong inflows earlier this year, gold ETFs have now recorded five straight weeks of outflows since mid-April, according to Bloomberg. In contrast, demand for silver, platinum, and palladium has risen, suggesting a shift toward riskier or more industrial-focused metals.

On the corporate front, activity remains robust despite weaker prices. Shandong Gold Group is preparing a second US Dollar bond offering after raising $300 million earlier in May. This signals ongoing investor interest in gold-related financial instruments. Harmony Gold Mining’s $1.03 billion acquisition of MAC Copper marks a strategic expansion into Australia and greater exposure to copper, showing that miners are diversifying to adapt to changing market conditions. Despite current bearish pressures, underlying risks such as the US fiscal deficit, unresolved trade tensions, and geopolitical instability in the Middle East and Ukraine continue to provide medium-term support for gold.
 

Technical Analysis: Gold Pulls Back From Resistance but Bullish Structure Remains Strong

The gold chart below shows a clear long-term ascending channel that began in early 2024. This structure remains intact despite recent downside movement. Price action bounced sharply from the lower boundary of the channel in April, reinforcing support and continuing the overall bullish bias.

Within this ascending channel, an immediate trend line developed in early 2025. The price has respected this trend line twice, forming key higher lows. These retests of support suggest strong buying interest on dips, even as momentum slows.

(Click on image to enlarge)

A secondary extension line marks potential resistance near $3,500. The last rally tested this region but failed to break through. The rejection from this extension level indicates the need for stronger fundamentals or a shift in sentiment to propel prices higher.

Current trading activity shows consolidation between the immediate trend line and the $3,350 level. If gold maintains support near $3,250–$3,280, a retest of the upper channel and extension resistance could follow. However, a break below this range might expose the $3,000 psychological level and the lower boundary of the channel. Price action remains bullish overall but is in a corrective phase. Watch for further interaction with trend support zones and confirmation from volume and momentum indicators for the next directional move.
 

Conclusion

Gold prices remain under pressure as shifting sentiment and a stronger US Dollar weigh on safe-haven demand. Risk-on behaviour is gaining momentum, fueled by improving trade prospects and fading geopolitical fears. Investors are rotating into alternative assets, with outflows from gold ETFs and rising interest in other precious metals. Despite recent losses, gold continues to trade within a broader bullish structure, suggesting long-term support remains. However, without renewed fundamental catalysts, further downside risks persist in the near term. 

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