Gold market: May 2025 overview and June 2025 outlook. A monthly digest by the global broker Octa

KUALA LUMPUR, MALAYSIA – Media OutReach Newswire – 5 June 2025 – May proved to be a rather challenging month for gold traders. XAUUSD, the primary financial instrument for trading gold, fluctuated in a relatively broad range between $3,120 and $3,435 per ounce (oz), but finished the month virtually unchanged, narrowly recording a fifth consecutive monthly gain. Although trading started on a bearish note, XAUUSD found support in the $3,200 area and even rebounded slightly. However, the failure to confidently break above the critical $3,430 mark led to a short-term bearish trend, with prices falling by nearly 9% by mid-May. Subsequently, technical dip-buying and robust safe-haven demand spurred a recovery in XAUUSD, which remained comfortably above its 50-, 100-, and 200-day moving averages (MAs). Nevertheless, May marked the first month since November 2024 when gold did not reach a new all-time high. Notably, the monthly chart for May has formed a strong doji candlestick, potentially signalling traders’ indecision and a possible mid-term reversal.

Overall, the past month presented a rather bumpy ride for traders as it was fueled by a series of notable market-moving events (outlined below). Gold investors contended with persistent trade-related news, shifting geopolitical dynamics in the Middle East and Eastern Europe, rapidly changing monetary policy expectations and U.S. recession probabilities as well as escalating concerns regarding global debt and weakening U.S. dollar. Demonstrating its traditional role, gold once again highlighted its inherent value as a safe-haven asset, potentially indicating continued positive performance in the near future.

Major market-moving events:

• 5-6 May. XAUUSD rallied by more than 6% in just two days as buying from China increased after its markets reopened following a long Labour Day holiday, which ran from 1 May to 5 May. In addition, President Trump’s announcement of a 100% tariff on foreign films renewed trade war fears, weakened the U.S. dollar, and made gold more appealing to holders of other currencies.
  
• 7-8 May and 12 May. Gold started to pull back from the $3,430 level as the market began to price in the potential easing of trade tensions ahead of the scheduled meeting between the U.S. Treasury Secretary Scott Bessent and Vice Premier of China He Lifeng in Geneva, Switzerland. Furthermore, the U.S. announced a ‘breakthrough’ trade agreement with Britain, which had an additional bullish impact on the greenback (and a bearish impact on the bullion). Improving risk sentiment and rising hopes for the normalisation of global trade relations culminated on 12 May when the U.S. and China announced that they managed to reach a temporary trade deal. As a result, gold prices plunged by as much as 3% on 12 May and continued to fall for another three trading sessions.
  
• 15 May. Gold began to erase earlier losses after touching critical support in the 3,150 area, which triggered a flow of pending buy-limit orders, helping pull XAUUSD up by almost 2%. In addition, soft U.S. Producer Price Index (PPI) data prompted investors to expect more rate cuts by the Federal Reserve (Fed), further supporting gold prices.
  
• 20 May. As investors were still digesting the long-term implications of Moody’s downgrade of the U.S. debt, U.S. President Donald Trump was attempting to convince his fellow Republicans in the U.S. Congress to unite behind a sweeping tax-cut bill, which is widely expected to worsen the federal budget deficit outlook. As a result, the U.S. dollar continued to fall, while gold’s price rose towards $3,300 per oz.
  
• 23 May. Gold prices rose by almost 2%, achieving their best week in six. This was largely due to investors seeking a safe haven as U.S. President Donald Trump renewed tariff threats, recommending a 50% tariff on European Union (EU) imports from 1 June and stating that Apple would face a 25% tariff on iPhones made outside the U.S.
  
• 29 May. After declining for the previous three trading sessions, XAUUSD rose again after a U.S. appeals court reinstated President Donald Trump’s sweeping tariffs, just a day after most of the tariffs were blocked by a trade court.

‘May was a wild ride for the gold market thanks to America’s erratic trade policies,‘ says Kar Yong Ang, a financial market analyst at Octa broker. ‘Ever since Trump announced his reciprocal tariffs in April, they have been repeatedly delayed, adjusted, challenged, blocked and reinstated, sowing chaos, breeding uncertainty and leaving traders with no clear direction‘.

Indeed, as mentioned previously, the XAUUSD monthly chart shows a significant doji candlestick for May, indicating trader indecision and a potential mid-term reversal. In fact, the short-term trend from 22 April can generally be described as ‘sideways’, as traders are unsure about the bullion’s next big move..However, the broader, long-term trend is still decidedly bullish, as gold’s price remains comfortably above key trendlines and MAs. Overall, chaotic U.S. trade policy, rising fears about the sustainability of the U.S. twin deficits (fiscal and trade), endless geopolitical tensions and political instability, and solid structural demand on the part of central banks helped keep the bullion’s price near all-time highs. In addition, the big technical picture has been positive, resulting in trend buying by investors.

Physical demand for bullion has been a key driver behind the rising price of gold in recent months. Just recently, a Hong Kong Census and Statistics Department (C&SD) report showed that China’s total gold imports via Hong Kong nearly tripled in April, hitting their highest level in more than a year. A total of 58.61 metric tons (mt) of gold was imported via Hong Kong in April, up 178.17% from 21.07 tons in March. And these figures may not even provide a complete picture of Chinese purchases, as gold is also imported via Shanghai and Beijing. Indeed, the People’s Bank of China (PBoC) has been actively adding gold to its reserves for six straight months. According to the World Gold Council, PBoC added 2.2 mt to its gold holdings in April, which now stand at 2,295 mt, 6.8% of total reserve assets. Other countries, notably India and Russia, also continued to stockpile gold. Overall, according to global broker Octa’s estimates, global central banks have added more than 240 tons of gold to their reserves in Q1 2025.

Interestingly, U.S. trade policy also affected physical flows among Western nations. According to Swiss customs data, gold imports to Switzerland from the U.S. jumped to the highest monthly level since at least April 2012 after excluding precious metals from U.S. import tariffs. Reuters reported that Switzerland, the world’s biggest bullion refining and transit hub, and Britain, home to the world’s largest over-the-counter gold trading hub, registered massive outflows to the U.S. over December-March as traders sought to hedge against the possibility of broad U.S. tariffs hitting bullion imports.

Apart from central banks, global investors have also remained quite bullish on gold. According to the Commodity Futures Trading Commission (CFTC), large speculators (leveraged funds and money managers) were still net-long COMEX gold futures and options as of 27 May, 2025. Long positions totalled 152,034 contracts vs only 34,797 short contracts. Meanwhile, according to LSEG, a financial firm, flows into physically-backed gold exchange-traded funds (ETFs) reached almost 50 mt year-to-date. Most recently, however, speculative bullish interest in gold and ETFs flows have been subsiding.

‘Although large speculators remain net-long, the size of their exposure is substantially smaller compared to what it was back in September 2024, when the uncertainty around the U.S. Presidential elections fuelled bullish bets‘, says Kar Yong Ang, adding that ETFs actually recorded a minor outflow in the first half of May.

Outlook
Fundamentally, the outlook for gold looks bright, but there are important caveats. We have singled out three important factors that will continue to play out in June and the rest of 2025.

Geopolitical uncertainty
Lingering global economic and geopolitical risks continue to play out, with the ongoing trade negotiations between the United States and the rest of the world, particularly China, being the most critical factor affecting the gold market and the global financial system.

The conflicts in the Middle East, such as the Israel-Hamas hostilities, a brief spat between India and Pakistan, and the ongoing conflict between Russia and Ukraine, have destabilised world politics and raised many fears ranging from oil and food supply disruptions to the prospect of a worldwide conflict. Gold, considered a ‘safe-haven’ asset, typically sees increased demand during political uncertainty and instability. While it is extremely difficult to project the resolution of geopolitical conflicts, let alone to forecast the emergence of new ones, peace negotiations in the hottest regions have already commenced. ‘Conflicting parties seem to have at least started to talk. A cease-fire in the Middle East and Eastern Europe is now more likely than it was only a month ago, but a lasting peace may take years to achieve. Either way, any progress in negotiations or even a temporary cessation of hostilities will improve risk sentiment and have a bearish impact on gold,‘ says Kar Yong Ang, global broker Octa analyst.

The looming 8 July tariff deadline imposed by U.S. President Trump further complicates the global political landscape, adding another reason for gold prices to remain elevated. As of today, the United Kingdom is the only country that has signed a new trade deal with the U.S., while trade talks with dozens of other countries have progressed too slowly. Negotiations remain unwieldy, while China and the U.S., the world’s two largest economies, continue to accuse one another of breaching the Geneva trade deal. As long as trade tensions persist, investors will be reluctant to sell gold.

Global monetary policy
Gold is priced in U.S. dollars and is therefore highly sensitive to changes in U.S. interest rates, inflation, and the greenback’s value. As already mentioned, the market is positioned for a dovish Fed. In fact, the latest interest rates swap market data implies roughly 75 basis points (bps) worth of rate cuts by the Fed by the end of December 2025. It is widely expected that other central banks will not fall far behind. For example, after the latest Eurozone inflation figures came out lower than expected, investors now expect the European Central Bank (ECB) to deliver two quarter-point rate cuts by the end of December 2025. Likewise, the Bank of England (BoE) is anticipated to announce at least two rate cuts of 25 bps each before the end of the year. Fundamentally, a less tight (or looser) monetary policy worldwide is a major bullish factor for gold. Because gold has no passive income and does not pay any interest, the opportunity cost of holding it becomes lower when central banks reduce their policy rates. The main risk, of course, is inflation. Should it remain above central banks’ targets or, even worse, start to increase, the Fed and its counterparts will be forced to hold the rates higher for longer.

‘Inflation is a major concern. Tariff-related price increases are yet to be felt, and although U.S. consumer 1-year and 5-year inflation expectations have eased, they remain very high by historical standards. I think some central banks, and maybe even the Fed, will prefer to wait until trade tensions are resolved before committing fully to rate cuts,‘ says Kar Yong Ang.

Physical demand
Physical demand for gold may continue to increase primarily because China, a significant gold consumer, remains an active buyer, but also because global central banks in general are increasingly turning to gold to diversify their reserves away from the U.S. dollar. Specifically, China has seen its national currency, the renminbi (RMB), appreciate more than 2% over the past month. This is not a welcoming development for a country whose economy heavily depends on exports. Thus, Chinese authorities may relax gold import quotas to stop the yuan from appreciating too much. As a result, the physical and investment demand for gold in China may rise in the months ahead. As for India, the demand for gold may temporarily slow due to seasonal factors, but is unlikely to reverse. Indian jewellers may delay making new stock acquisitions as monsoon rains are arriving, while the wedding season is concluding, but that will only have a temporary impact.

Technical picture
Kar Yong Ang, global broker Octa analyst, said: ‘From a technical perspective, XAUUSD looks bullish no matter how you look at it. 3,397, 3,438, and 3,463-3,471 levels are still real targets for bulls. Only a drop below 3,125 will invalidate the underlying bullish trend, and even then XAUUSD is more likely to trend sideways than to go deep down.’

Conclusion
Overall, we continue to see a generally bullish picture for gold, but it may be changing soon. Fundamentally, gold is still a ‘buy’ but no longer a ‘screaming buy’, as we labelled it in our August 2024 Digest. Wall Street analysts predict higher prices. Goldman Sachs recently hiked its 2025 gold forecast to $3,700 per oz, particularly due to strong central bank demand, implying a 10% upside potential from the current levels. At the same time, large speculators have already started to reduce their net-long exposure, while the outlook for the global monetary policy remains uncertain due to tariffs. Investors, in general, may be a bit too optimistic when it comes to rate cuts.

‘As things currently stand, it is still very hard to draw a bearish case for gold, but I do think that the bullish trend is showing first signs of exhaustion and some consolidation is likely to follow‘, said Kar Yong Ang, global broker Octa analyst. Next month will be critical for the gold market as it features seven key rate decisions and will likely be packed with news related to trade negotiations. Traders should be cautious as June news may essentially determine the XAUUSD trend for the next six months.

Key Macro Events in June (scheduled)

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