Gold saw a steep weekly loss of more than 4% last week

By: Renisha Chainani, Head – Research at Augmont

Gold saw a steep weekly loss of more than 4% last week, its most since November 2024, as it dropped toward $3180. Since its April peak of $3500, the precious metal has lost more than $300 as technical selling quickens and safe-haven demand wanes.

After the US and China agreed to lower tariffs for 90 days last week, risk sentiment improved. Meanwhile, geopolitical tensions stayed low as India-Pakistan and Middle East threats stabilised. The first direct meetings between Ukrainian and Russian officials since 2022 were eventually held after a period of contradictory reports and diplomatic impasse.

Furthermore, following Friday’s market close, the Moody’s Ratings agency lowered the US’s sovereign debt credit rating. Citing unsustainable debt growth and growing interest rates, the agency downgraded U.S. debt from Aaa to Aa1. It changed its assessment of the United States from “negative” to “stable” at the same time. The US is dealing with growing debt finance costs that are significantly higher than those of comparable government debt loads, according to Moody’s. In particular, US interest obligations “that are significantly higher than similarly rated sovereigns” were emphasised by Moody’s.

Weaker-than-expected U.S. economic data has strengthened market expectations of interest rate cuts by the Federal Reserve, pushing the dollar lower and reducing Treasury yields—factors that typically support non-yielding assets like gold. Caught between these opposing forces, gold prices may continue to face headwinds. However, significant losses below current levels appear unlikely, as despite recent optimism surrounding trade and geopolitics, uncertainty remains the dominant theme for market participants.

The market may take a wait-and-see stance due to changing investor attitudes in the global marketplace, which might cause gold prices to drop this week. This week’s selloff is the largest since mid-June 2021 and is marginally steeper than the November selloff following President Donald Trump’s election victory.

At this point, gold is rapidly losing money and appears to be about to experience another decline. Fears of a trade war, easing geopolitical tensions, and the Fed’s propensity to maintain its current monetary policy are all factors that are hurting the price of gold.

Gold has closed below $3180 after failing to hold above the key $3200 barrier. A possible trend reversal from April’s record highs is indicated by the bearish double top pattern visible on the daily chart. The 50-day Exponential Moving Average (EMA) around $3170 further supports the $3160–$3150 (~Rs 91500) support zone, which is in tight alignment with the pattern’s neckline. A clear breach below this range would pave the way for a more significant decline in the direction of the $3000 (~Rs 86000) handle. Support for silver was maintained over $32 an ounce last week. Silver was down 1.5% at $32.26, and the ratio of gold to silver has fallen back below 100 due to silver’s greater outperformance over gold. The rotation into silver should continue as investors focus on improved industrial activity and recession fears begin to subside. Silver is expected to continue its range-bound momentum from $32 (~Rs 94000) to $34(~Rs 98000).