On May 16, 2025, spot gold prices in New York dropped to $3,178.06 per ounce, slipping 1.9% on the day and logging the steepest weekly decline in six months. Over the week, gold prices slid more than 4%, as investor sentiment sharply reversed. The downturn was largely fueled by a stronger U.S. dollar, easing tensions in U.S.-China trade talks, and renewed speculation over the Federal Reserve’s policy direction.

Gold had briefly held above $3,200 in early trading, but momentum faded as the U.S. dollar index rose for the fourth straight week and appetite for riskier assets grew. Selling pressure intensified in the afternoon session, dragging gold down to an intraday low of $3,152.40. The session high was $3,253.40. Silver followed suit, sliding 1.8% to $32.08 per ounce, while platinum and palladium fell 0.5% and 1%, respectively.

A shift toward risk-on sentiment was the primary drag on gold this week. A temporary agreement between the U.S. and China to postpone planned tariff hikes originally scheduled for April eased geopolitical tensions, dampening gold’s safe haven appeal. Meanwhile, the dollar held firm throughout the week—even after a modest pullback on Friday. The dollar index’s four-week winning streak marks its longest run since 2024. A stronger dollar raises the cost of gold for foreign investors, applying further pressure on prices.

At the same time, softer U.S. inflation readings had initially boosted expectations of a Fed rate cut this year. However, comments from several Fed officials in recent days suggested caution toward any near-term easing. This led markets to reassess the timeline for potential rate reductions. Yields on 10-year Treasury Inflation-Protected Securities (TIPS) rose to 2.20%, their highest level in a decade, increasing the opportunity cost of holding non-yielding assets like gold.

From a technical standpoint, gold faced stiff resistance near $3,250, aligned with its 200-week moving average. The chart now shows a clear “double top” formation. Analysts point to the $3,110–$3,130 zone as key support. Should prices fail to hold above this level, a retreat to the psychologically significant $3,000 mark could follow, potentially triggering a wave of technical selling.

Fund positioning data reflects waning investor confidence. According to the latest report from the CFTC, non-commercial net long positions in gold futures fell sharply by over 120,000 contracts in the week ending May 14. That signals broad profit-taking and reduced conviction that gold will continue to rally in the short term.

Analysts note that while gold has benefited in recent months from central bank buying and geopolitical uncertainty, near-term risks remain due to the persistent strength in the dollar and an overcrowded speculative long trade. However, if next week’s release of the U.S. core PCE inflation index shows further cooling, it could revive hopes for Fed rate cuts and renew demand for gold.

Looking ahead, markets will be closely watching the minutes from the Fed’s May policy meeting and remarks from central bank officials for clues on the policy outlook. For traders, the $3,110 level is critical—holding above it could set the stage for a potential rebound. But if support fails and prices break below $3,000, the selling could accelerate swiftly.

(Data as of 5:00 p.m. New York time, May 16, 2025)