Trading Update 11th May 2025

How Gold Reacted to Fed Signals and Trade Tensions This Week

Last week, the gold market saw modest yet meaningful movement as political tension, dollar fluctuations, and rate speculation drove investor sentiment. Spot gold prices stayed within a tight but tradable range, offering opportunities for short-term traders and spread bettors.

From Monday through Sunday, gold responded to key macroeconomic events, including comments from central banks, trade updates between the US and China, and mounting geopolitical uncertainty. These elements shaped market mood, risk appetite, and, ultimately, gold’s direction.

Let’s break down what happened—and what it means for the week ahead.

Spot Gold Price Movements

Gold started the week strong, as investors turned to safe havens following renewed fears of a breakdown in US–China trade negotiations. On Monday, 5 May, spot gold rose 2.3%, breaking through the $3,315 barrier and briefly testing intraday highs near $3,320. This surge was mainly driven by a weaker dollar and cautious positioning ahead of US inflation data and central bank commentary.

As the week progressed, sentiment began to shift. Positive trade signals from Washington and Beijing eased investor nerves, reducing demand for gold, causing a brief dip midweek. Despite this, support levels held firm, and gold rebounded on Friday to close at $3,325.42.

Overall, gold traded within a relatively tight $10 range, from $3,315 to $3,325. The support at the lower end gave technical traders and spread bettors clear entry points with minimal downside risk.

Political and Economic Drivers

Political headlines dominated gold’s movement throughout the week. Early Monday, hawkish remarks from US officials increased concern over stalled trade talks. That led to a wave of buying across safe-haven assets, pushing gold higher.

Later in the week, softer language from the US and China helped ease tensions. Markets responded by shifting funds from gold to risk assets, such as equities and oil.

At the same time, Washington’s ongoing budget disputes raised questions about future US spending. Concerns over potential gridlock in Congress kept investors on edge, limiting gold’s downside. Across the Atlantic, the UK government remained under pressure over its fiscal policy stance, adding to global uncertainty.

Impact on Equities and Other Markets

As often happens, equity markets and gold prices moved in opposite directions. When gold rose sharply on Monday, major indices such as the FTSE 100 and S&P 500 dipped. Defensive stocks outperformed, as investors braced for a potential uptick in volatility.

Later in the week, as equity markets bounced on improved trade sentiment, gold eased. In the US, the technology and industrial sectors led the way, while energy stocks climbed on hopes of reduced trade barriers.

This inverse relationship provided useful cues for spread bettors. A fall in risk sentiment tended to lift gold and weaken equities. When traders felt more optimistic, risk-on trades gathered pace, weighing on gold prices. Those watching both markets closely could use these shifts to time entries and exits more precisely.

Safe-Haven Demand and Global Risks

Geopolitical risks continued to support gold’s role as a safe-haven asset. Tensions in the Middle East escalated after reports of military posturing near key shipping routes. While these events didn’t trigger a major market panic, they did reinforce gold’s appeal during global instability.

Meanwhile, conflict in Eastern Europe remained unresolved. Though largely priced in by markets, ongoing headlines reminded investors of the risks still in the geopolitical landscape.

These developments didn’t cause dramatic price spikes in gold but kept a floor under the market. If such risks persist, safe-haven demand will likely remain a key theme.

Spread Betting Strategy: A Trader’s View

Last week’s steady range made gold ideal for tactical spread betting. The $3,315 support level proved reliable, bouncing twice during the week. Traders placing long positions near this level, with tight stop losses just below $3,310, saw attractive risk-to-reward setups.

Conversely, resistance near $3,325 created shorting opportunities for those expecting the price to stall. Midweek pullbacks offered quick entries for short trades, particularly as gold reacted to shifting headlines from trade and central bank discussions.

For the week ahead, traders should watch for fresh data on US inflation and interest rates. If inflation runs hot, gold may test new highs. Conversely, a dovish stance from the Federal Reserve could support a fresh rally, especially if the dollar weakens further.

Technical Indicators and Market Sentiment

Gold’s technical outlook remained solid throughout the week. The 50-day moving average held well, giving buyers confidence to enter on dips. Meanwhile, the Relative Strength Index (RSI) flirted with oversold territory early in the week, encouraging a round of short-covering and new longs.

Market sentiment stayed cautiously bullish. Large speculative accounts held modest net short positions, suggesting there’s room for further upside if sentiment shifts. Any surprise economic or political developments could spark a squeeze higher.

With momentum largely neutral, traders watch closely for the next breakout signal.

Seasonal Trends and External Influences

Spring temperatures between 10–20°C (50–68°F) in key consumer regions such as Europe and North America had little direct influence on gold demand. However, ongoing interest from central banks in Asia helped underpin the longer-term trend.

Global inflation remains a focus. Though price pressures have eased slightly in recent months, core inflation figures remain sticky in the US and Europe. As long as real yields stay suppressed, gold will likely hold investor interest as a hedge against currency devaluation and inflation uncertainty.

What to Watch This Coming Week

The coming week will be critical for gold traders. Key US inflation data and comments from Federal Reserve officials are due. Any signs that rate cuts may be on hold could weigh on gold. On the other hand, dovish commentary could send prices higher.

Also worth watching are updates on US–China trade talks and any political tensions that might surface. Traders should be ready to act quickly as headlines shift sentiment in minutes, not hours.

Final Thoughts

From 5th to 11th May 2025, the gold market delivered a stable yet tradable pattern. Spot prices stayed within a $10 range, offering precise entry points for long and short spread betting strategies. Political headlines, trade tensions, and central bank commentary were key in shaping price action.

While gold didn’t break out dramatically, it remained responsive to news and risk sentiment, allowing savvy traders to capitalise on intraday moves. With primary data on the horizon, next week may offer even more opportunities.

Stay focused, stay informed, and use the levels that mattered this week as your reference points for the next.

Check out the up-to-date and historic gold prices here.