On May 5, 2025, international gold prices staged a strong rebound. Spot gold (XAU/USD) surged 2.36% in one day, hitting an intraday high of $3,338.30 per ounce and eventually settling at $3,333.40 — its highest close in nearly a week. Throughout the day, prices consistently held above $3,235, amid heightened market concerns over geopolitical tensions and policy uncertainty. As a result, capital continued to flow into safe-haven assets like gold.

Geopolitical and Trade Fears Ignite a Flight to Safety

Tensions in the Middle East have flared up again, raising fears of disruptions in oil supply. This has heightened concerns over regional stability and prompted investors to shift toward safer assets. However, the real market jolt came from a series of trade-related announcements by U.S. President Donald Trump.

On Sunday, Trump imposed a 100% import tariff on all foreign-made films—directly impacting Hollywood and the global entertainment industry. The following day, he hinted at a new round of tariffs on imported pharmaceuticals, expected within two weeks. This could strain the pharmaceutical supply chain worldwide and weigh heavily on the healthcare and entertainment sectors of the S&P 500—together accounting for over 8% of the index. If earnings expectations in these areas begin to slip, we may see even more capital pivoting toward gold.

Volatile Dollar and Central Bank Buying Fuel Gold Rally

Despite economic data beating estimates, the U.S. dollar index pulled back 0.8% from recent highs last week. Part of this reversal comes from renewed optimism about a possible restart of U.S.–China trade talks. Treasury Secretary Mnuchin’s recent remarks about a more flexible approach to trade negotiations prompted some traders to unwind their long dollar positions. This dollar retreat gave gold a tailwind, contributing roughly 45 basis points to the day’s gains.

Meanwhile, global central bank demand for gold remains solid. The People’s Bank of China increased its gold reserves for the 11th straight month, and several Middle Eastern nations have been converting oil revenue into strategic gold holdings. Notably, there was strong institutional buying activity even as gold traded above $3,300, indicating investors are undeterred by elevated prices. Many analysts see continued central bank demand as a major pillar of support for gold.

Technical Outlook: Sideways Grind Before Key Data

From a technical perspective, gold is holding above its 5-day, 20-day, and 50-day moving averages, with the MACD histogram continuing to rise—suggesting strong short-term momentum. The next resistance lies around $3,352. A breakout above that level could pave the way for a push toward last year’s highs above $3,500.

However, all eyes are now on the upcoming Federal Reserve rate decision on May 7 and the U.S. nonfarm payrolls report due May 9. Should Fed Chair Jerome Powell suggest that the U.S. economy remains resilient enough to tolerate current high interest rates, markets may reassess the timeline for any potential rate cuts. That could introduce some technical selling pressure on gold, with a key support zone seen around $3,290.

Trading Strategy

Short-term traders should watch the $3,290–$3,300 support range. If buying interest holds up in this zone, there could be room for another leg higher. For mid- to long-term investors, it’s worth tracking quarterly gold reserve data from global central banks. If the numbers confirm sustained buying momentum, it may be prudent to accumulate gold gradually between $3,250 and $3,300.

One risk to note: if tensions in the Middle East de-escalate quickly, profit-taking could accelerate in the short term. Investors are advised to set appropriate stop-loss measures to manage potential downside.