Date: May 2, 2025 by Florian Grummes

It was just four weeks ago that the gold price, following its furious rise to $3,167, experienced a sharp setback on April 3rd amid collapsing stock markets. However, this healthy pullback was only played out through price and not time, so that the low was already seen on April 7th with prices bottoming around $2,955 (-6.7%).

Subsequently, the gold bulls shifted into an even higher gear and drove gold prices up by 18.37% or $543 within just 15 days to a new all-time high of $3,500.

However, at this point there was indeed a hard reversal signal and the gold price had to give up almost $300 or -8.51% at its peak. After the Chinese had been buying up the gold market for weeks as if in a frenzy, weaker gold prices were seen in Asian trading for the first time in several days since the new all-time high.

Due to International Labor Day, all markets in China will also remain closed from May 1 to 5. Not surprisingly, the correction continued on May 1, and gold tested the round mark of $3,200 for support.

China’s new gold deposits abroad will further fuel gold demand Despite the decline, demand for gold will remain robust.

Especially because central banks and Asian investors continue to buy.

Additionally, China plans to advance the internationalization of its currency, the Yuan, by establishing gold deposits abroad. This is intended to reduce dependence on the US dollar. At the same time, it naturally continues to challenge the global financial hegemony of the USA.

According to Chinese regulatory authorities, certain gold products traded on the Shanghai Gold Exchange (SGE) will be able to be delivered internationally in the future.

This is part of a broader action plan with 18 measures aimed at strengthening cross-border financial services in Shanghai to make Chinese companies more globally competitive. The plan supports initiatives such as the Belt and Road Initiative and promotes the use of the Yuan as well as foreign exchange services to deepen China’s integration into global financial markets.

In 2024, cross-border payments in Yuan in Shanghai already reached 29.8 trillion Yuan (approx. $4.1 trillion), an increase of 30% compared to the previous year, highlighting the growing importance of the Yuan in international trade.

By establishing gold deposits abroad, China aims to facilitate the physical delivery of gold and thus increase the attractiveness of the Yuan as a trading currency. This strategy aims to involve global investors more deeply in Chinese markets and weaken the dominance of the US dollar in the long term. Therefore, a major correction in the gold price seems unlikely.

Nevertheless, a breather at a high level after the steep rise since mid-December would only be healthy. Ideally, this would occur above $3,000.

Gold in US Dollars – Reversal Signals After New All-Time High

Gold in US Dollars, Daily Chart from May 2, 2025. ©GOLD.DE

Already on April 7 and 9 – faster than anticipated in our last gold analysis four weeks ago – the predicted buying opportunity around $2,950 set in. Starting from $2,955, the gold bulls immediately initiated the next upward movement, which proved to be the steepest rally so far in the course of the bull market that has been ongoing since autumn 2022.

Within just eleven trading days, the gold price exploded by more than $543 or 18.37% and reached a new all-time high of $3,500 on May 22!

However, the new price peak marked the start of a significant sell-off on the same trading day, with the closing price at $3,380 bringing a clear reversal signal to the daily chart.

Subsequently, the gold price fell by about $300 within seven trading days – a decline that, while not surprising in this context, was nevertheless significant.

So far, the support around $3,200 has withstood an initial attack from the bears. However, an open price gap awaits closure at approximately $3,175. Additionally, the rapidly rising 50-day moving average ($3,087) only comes into play at a significantly lower level, thus confirming the short-term need for correction.

While the daily stochastic has activated a clear sell signal, the oversold zone of the oscillator remains untouched for now. This means that gold bulls will likely have to be patient for a bit longer before seeing a reasonably good buying opportunity based on a heavily oversold condition.

Gold – Record Chase Followed by Pullback

Following the rapid rise of the gold price to a new all-time high of $3,500 on April 22, 2025, the last nine trading days saw a significant pullback of about $300 (-8.51%).

So far, the support at $3,200 has held. However, we suspect that over the coming days and weeks, the gold price, in line with the seasonal pattern, has correction potential down to the range of approximately $3,150 to $3,050.

Even in recent days, the bears have made only slow progress, so we suspect that the required correction process will primarily work itself out tricky over time and therefore will likely hold clearly above $3,000.

Author: Florian Grummes
Technical Analyst, Precious Metals Expert
www.goldnewsletter.de