Gold News: Losing the 50-Day Moving Average—Is a Prolonged Downtrend Ahead?

LONDON (May 16) Gold prices came under renewed pressure on Friday, slipping more than 1% as the market failed to build on Thursday’s sharp intraday recovery. Despite a temporary rally from lows near $3,120.76, the yellow metal remains on track for its worst weekly performance in six months. Sentiment has turned increasingly cautious as traders react to a firmer U.S. dollar and easing global tensions.

Dollar Strength and Trade Truce Weigh on Gold Appeal

Daily US Dollar Index (DXY)

The U.S. dollar index (DXY) is poised to notch its fourth consecutive weekly gain, bolstering its position against major currencies and dampening gold’s appeal for non-dollar holders. A temporary U.S.-China trade agreement, which includes mutual tariff reductions, has also undermined safe-haven demand. This progress in trade negotiations has lifted broader market sentiment, reducing the need for defensive positioning in gold.

WisdomTree strategist Nitesh Shah noted that “optimistic signals in terms of trade negotiations” alongside dollar strength have been key drivers weighing on gold this week. The risk-on tone is evident across asset classes, further limiting upside momentum for the metal.

FXEmpire