This shift has lowered demand for traditional safe-haven assets like gold, which had surged amid global trade frictions earlier in 2025.
“The market is digesting a combination of dovish inflation data and geopolitical calm, which typically erodes the defensive premium embedded in gold,” said a commodities strategist at KCM Trade.
Fed Rate Outlook and Dollar Weakness Provide Support
Despite the downward drift, gold prices are finding some footing amid growing expectations of Federal Reserve rate cuts. The U.S. Consumer Price Index (CPI) rose 2.3% year-on-year in April, slightly below forecasts, while core CPI ticked up 2.8%.
With inflation softening, traders are now pricing in two rate cuts by year-end, starting as early as September.
A weaker U.S. dollar, which generally supports dollar-denominated commodities, has helped cushion gold’s losses. The Dollar Index (DXY) slipped below 101.60 on Tuesday, reflecting reduced expectations of aggressive tightening by the Fed.
Short-Term Forecast
Gold and silver remain range-bound short term, with key breakouts hinging on Fed signals and technical pivots.
Source: Gold (XAUUSD) & Silver Price Forecast: XAU Eyes $3,258, XAG Tests $32.98 Breakout
