After reaching a peak near 4,900 USD/oz, gold has entered a relatively deep corrective phase, pulling back toward the 4,700 area.
However, this decline has not been characterised by panic selling, but rather by a controlled sequence of losses, interspersed with weak rebounds.
This reflects a process of distribution and profit-taking following three consecutive weeks of gains in early April.
As U.S. Treasury yields have climbed back to the 4.3-4.4% range, the opportunity cost of holding non-yielding assets like gold has increased, triggering portfolio rebalancing, particularly among institutional investors, thereby creating downside pressure without fully breaking the broader market structure.
In the current macro environment, gold is being pulled by two opposing forces. On one hand, geopolitical risks, especially tensions between the U.S. and Iran and disruptions in energy supply chains, continue to support safe-haven demand. On the other hand, rising oil prices have become a headwind for gold.
Higher energy prices reinforce expectations of persistent inflation, which in turn strengthens the Federal Reserve’s “higher for longer” stance.
As the interest rate trajectory is expected to remain elevated for longer, real yields tend to stay high, directly weighing on gold’s upside potential. In other words, factors that previously supported gold, namely inflation and risk, are now being offset by monetary policy expectations, making price reactions less sensitive compared to earlier phases.
At the same time, upcoming U.S. economic data releases this week, such as GDP and PCE, are likely to act as key catalysts for the next directional move. If these indicators show signs of cooling growth or easing inflationary pressures, expectations for a more dovish Fed could quickly return, providing support for gold. Conversely, if the data remains strong, the market will have further justification to reinforce the higher-for-longer narrative, thereby sustaining pressure on the metal.
It is also important to note that after falling sharply from 4,900 to 4,700, gold has not extended its decline but has instead moved sideways within a narrowing range of 4,650-4,750. This suggests that selling pressure has been largely absorbed, opening the door for a short-term equilibrium phase. In this context, the market is likely to continue consolidating as it awaits fresh catalysts from Fed policy signals and economic data.
Taking all these factors into account, the short-term outlook for gold leans toward consolidation, though not in a clearly constructive manner. Rather, it reflects a period of market indecision as expectations are being recalibrated.
The base-case scenario is for gold to continue trading sideways within the 4,650-4,750 range in the near term, as capital flows remain cautious ahead of clearer signals from the Fed and macro data. A breakout from this range will be critical in confirming the next directional move, signalling whether buyers or sellers regain control of the trend.
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