Trading Update 1st June 2025

Gold Prices Dip Then Rebound – Here’s Why

Over the week from 25 May to 1 June 2025, spot gold saw significant swings. On 25 May, gold opened at $2,610 per ounce as investors weighed global uncertainties. By 28 May, the price dipped to $2,580 amid a stronger U.S. dollar and rising yields. On 30 May, traders reacted to fresh economic data, briefly lowering gold to $2,575. A late-week rally brought spot gold back near $2,604 on 31 May. Daily swings reached up to $30 per ounce. Overall, the week closed with gold trading slightly below its opening level but with renewed bullish momentum.

Investors tracked gold’s volatility closely. Many traders noted that speculative positions in futures rose by about 5% during this period. The increased volume amplified small price moves. Wednesdays saw the most considerable intraday swings, driven by key economic releases. Friday’s trading exhibited calmer price action as markets absorbed multiple data points. Spot gold moved within a tight range of $2,575 to $2,610. This range-bound action set the stage for next week’s breakout.

Economic Indicators and Monetary Policy

U.S. Federal Reserve policy was a central theme this week. On 28 May, the Fed announced a 25 basis point rate cut, its first reduction since late 2024. Chair comments signalled caution on further cuts, citing mixed inflation data. Traders initially sold gold on the rate cut news, as lower rates usually weaken the dollar. However, lingering inflation worries supported a rebound in gold prices by week’s end.

Data from the U.S. revealed that core inflation held steady at 2.4% in May. Retail sales reports showed a modest 0.3% increase, hinting that consumer demand remained resilient. Analysts interpreted these numbers as a sign that the Fed may pause future cuts. The ambiguity around financial conditions drove gold’s late-week rally. Meanwhile, U.S. Treasury yields climbed, with the ten-year note briefly touching 3.90%. Higher yields generally pressure gold, but traders balanced that against safe-haven demand amid broader risks.

Geopolitical Developments

Geopolitical tensions played a notable role in gold’s fortunes. Skirmishes near the Strait of Hormuz in the Middle East raised supply concerns. Although the conflict did not disrupt oil shipping, it reminded markets of potential spillover. Investors turned to gold as a hedge against risk. At the same time, simmering disputes in Ukraine influenced European sentiment. Talks on new defence aid stalled, increasing uncertainty over regional stability. This prompted some investors to seek refuge in gold.

On the Asia front, U.S.-China trade talks saw little progress. New tariffs on electric vehicles and solar panels fed fears of a broader conflict. Chinese officials vowed to retaliate if the U.S. imposed further restrictions, heightening uncertainty. As a result, Asian investors increased gold buying on 29 May. Indian demand also increased ahead of the festival season, boosting physical purchases. Overall, political developments across multiple regions reinforced gold’s safe-haven appeal.

Central Bank and Demand Factors

Central banks continued to grow their gold reserves. China added approximately 20 tonnes during the week, bringing its official reserves to over 2,100. India purchased nearly 15 tonnes, marking its first significant buying since early 2024. These moves reflect a strategy to diversify holdings away from dollars. Smaller central banks in Eastern Europe and Africa also reported modest increases, citing currency stability as a key motive.

On the retail side, physical demand picked up in India and China. India’s bullion markets saw a 10% jump in local demand compared to last year’s week. Jewellers in Mumbai offered small discounts to clear inventories, spurring buying. In China, the start of the Dragon Boat festival on 1 June drove modest gold purchases. Meanwhile, Turkey’s central bank held reserves steady, selling small amounts to support its currency. Overall, official and retail demand provided a firm floor under prices late in the week.

Impact on Gold Stocks and ETFs

Gold price fluctuations influenced related equities. The SPDR Gold Shares ETF (GLD) opened at $303.60 on 25 May and dipped to $300.10 by 28 May. A rebound in spot gold lifted GLD to $303.00 on 31 May. Volume in GLD rose by 12% compared to the prior week. Traders noted that ETF inflows mirrored safe-haven flows into physical gold.

Miners also felt the impact. Barrick Gold shares ranged between $18.75 and $19.10 midweek before closing at $18.90 on 31 May. Newmont Corporation moved between $52.30 and $53.00, settling at $52.80 by week’s end. Junior miners, with higher production costs, showed wider swings. A small Canadian exploration firm saw a 5% jump on Monday, driven by speculation of a new high-grade discovery. Overall, mining stocks tracked gold but showed higher beta. Spread bettors found sharp intraweek swings tempting for short-term strategies.

Market Sentiment and Technical Signals

Market sentiment in futures and options hinted at growing bullish bias. Net speculative long positions in Comex gold futures rose 7% over the week. Open interest increased to just under 850,000 contracts. Analysts pointed to key technical levels. A close above $2,610 could trigger further upside, they argued. Conversely, failure to hold $2,575 might open the door to a deeper pullback. The Relative Strength Index (RSI) hovered near 55, suggesting neither overbought nor oversold conditions.

Options traders paid close attention to implied volatility. The front-month implied vol rose from 14% to 16% by Thursday, indicating higher price uncertainty. Put-call ratios for June contracts dipped below 0.90, reflecting more bullish bets. This pattern suggested traders expected gold to test the $2,620 resistance soon. Meanwhile, chart watchers noted a bullish MACD crossover on the daily chart, reinforcing a possible rally. Such technical cues gave spread bettors confidence to target a 20–30 dollar move in either direction.

Trade Flows and Currency Effects

Currency movements played a crucial part in gold’s weekly performance. The U.S. dollar index climbed from 103.50 to 104.20 by midweek before easing back to 103.80 on Friday. A stronger dollar generally pressures gold, explaining early-week selling. However, Friday’s dollar dip allowed gold to recoup losses. Traders monitored the euro, which strengthened slightly on strong German PMI data. The euro moved from 1.0930 to 1.0985 against the dollar, bolstering euro-priced gold demand.

Emerging market currencies also influenced demand. The Turkish lira weakened by 1.8%, prompting local investors to buy gold as an inflation hedge. In India, the rupee traded near 82 per dollar, down from 81.50 last week, making imported gold costlier. Despite that, strong festival demand in India supported physical buying at local jewellers. Chinese yuan remained stable around 6.38 per dollar. This currency stability helped Chinese gold importers maintain consistent buying patterns.

Regulatory and Tax Changes

Several countries implemented minor regulatory adjustments affecting gold. The federal government extended a gold import duty holiday in Canada until July. This move aimed to support domestic jewellers and refiners facing slowing demand. As a result, Canadian retailers reported a 5% increase in order flows. Australia announced a slight tightening of anti-money laundering checks for bullion dealers, but these measures had minimal market impact. In South Africa, mine production data released on 29 May showed a 2% year-over-year decline. This supported gold miners’ stock prices amid worries about tighter supply.

Meanwhile, the U.S. introduced new reporting requirements for large-scale gold transactions. Dealers must now report any customer purchase over $15,000 daily. The intention is to curb illicit flows and money laundering. Traders noted that this rule might dampen late-week physical demand in Florida and Texas. Yet, overall global flow remained robust, as most large buyers operate through institutional channels. Tax season in the UK also saw a spike in gold demand, as investors sought to rebalance portfolios before closing books on 5 April. Although the tax deadline fell weeks ago, some late filers continued last-minute trades.

Trading Strategies and Outlook

Spread bettors found multiple opportunities this week. Swing traders targeted the $2,575–$2,610 range. They set limit orders at round-number levels to capture price rejections. Day traders exploited $10 intraday moves around key data releases. They monitored U.S. jobless claims on Thursday for breakout triggers. Trend-following systems, using moving average crossovers, signalled a possible move above $2,615. This encouraged momentum buys into Friday’s close.

Longer-term traders focused on macro drivers. They eyed the Fed’s next policy meeting in late June, where further rate decisions could redefine gold’s path. Analysts suggested that if U.S. inflation remained above 3%, gold could test $2,650 by mid-July. Conversely, a surprise uptick in unemployment might push gold lower towards $2,550. Spread bettors balanced these scenarios by using tight stop losses and adjusting position sizes. Risk managers emphasised scaling into positions gradually to avoid whipsaw losses.

Conclusion

The week from 25 May to 1 June 2025 highlighted gold’s role as a safe-haven and inflation hedge. Spot gold moved within a $35 range as traders balanced economic, geopolitical, and currency factors. U.S. rate cuts and mixed inflation data drove early-week declines, while late-week geopolitical tensions and central bank buying supported prices. Gold-related stocks and ETFs mirrored these dynamics, offering varied spread betting opportunities. Technical signals pointed to a potential breakout above $2,610, though failure to hold $2,575 could lead to deeper declines.

Looking ahead, traders will closely watch the Federal Reserve’s next steps and global trade discussions. Military developments in the Middle East and EU fiscal talks may also sway sentiment. Emerging market currency moves will influence demand dynamics, especially in India and Turkey. Monitoring macro data releases, technical indicators, and central bank announcements for spread bettors remains crucial. As summer demand and seasonal trends emerge, gold may test new highs or retrace, presenting a range of strategies for nimble traders.

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