Gold Falls Below $3,300 as Fed Delay, Geopolitical Calm Crush XAU/USD Momentum

XAU/USD Drops Toward $3,280 as Support at $3,300 Crumbles

Gold (XAU/USD) extended its sharp decline on Friday, sinking to $3,282.68, a fresh one-month low, as safe-haven demand eroded following geopolitical de-escalation and ahead of critical U.S. inflation data. The breakdown below $3,323.80, formerly the 50-day EMA and key psychological support, now defines the technical ceiling. This marks a fall of over $200 from April’s historic high above $3,500, confirming the market’s technical pivot into a short-term bearish phase.

Risk Sentiment Shifts as Iran-Israel Ceasefire Holds

The de-escalation of hostilities between Iran and Israel, brokered by U.S. diplomacy, has drastically lowered geopolitical premiums in gold. The Trump administration also struck a deal with China to accelerate the shipment of rare earth metals, further calming international trade tensions. These events have reduced investor fear, leading to a migration away from defensive assets like bullion and toward equities and other risk-on assets. As this backdrop neutralizes traditional safe-haven flows, gold is struggling to find a bid despite the weakening U.S. dollar.

Fed Policy Expectations and PCE Inflation Trigger Market Paralysis

The release of the PCE Price Index, the Federal Reserve’s preferred inflation measure, looms large. April’s core PCE showed a 2.5% YoY increase, and forecasts for May hover at 2.6%, implying persistent pricing pressures. Richmond Fed President Thomas Barkin warned tariffs may intensify inflation going forward, justifying the Fed’s hesitation on rate cuts. Chair Jerome Powell reiterated that the central bank is not in a rush, emphasizing that the effect of trade policy needs to be fully understood before monetary easing can resume.

Despite that stance, weak GDP and jobless claims data are pulling the other way. Q1 U.S. GDP was revised lower to -0.5%, worse than the previous -0.2%, while continuing unemployment claims hit 1.974 million, the highest since November 2021. These cracks in macro data have amplified speculation that rate cuts could begin by July, a narrative that helped pressure the U.S. dollar to its lowest since March 2022. Yet gold continues to fall, highlighting the unusual divergence between USD weakness and XAU/USD performance.

Technical Breakdown Clears the Path Toward $3,210 and Below

Technically, gold’s descent below the ascending trendline and 200-period SMA has opened the downside toward $3,245, with deeper supports forming near $3,210 and $3,175. The loss of structure on the 4-hour chart suggests accelerating momentum for bears unless a reversal clears $3,324. The previous resistance zone between $3,368–3,370 is now an area of high congestion that may cap any near-term recovery. Without a fresh geopolitical flashpoint or surprise dovish Fed shift, the technical outlook remains skewed to the downside.

Local Markets React: Armenian Gold Prices Soar 30% in 12 Months

The global gold rally peaked in April with prices surpassing $3,500, prompting immediate price adjustments in local markets like Armenia, where 999 fine gold averaged 42,000 drams/gram (~$110). For 585-grade gold, prices hit 30,000 drams, a jump from 20,000 drams in 2024—representing a 30% increase year-on-year. These price spikes have slashed domestic jewellery sales in half, according to producers like the Sargsyan brothers, who now focus more heavily on exports to Kazakhstan, Russia, Uzbekistan, and the UAE. In these markets, gold is seen more as a store of value than luxury.

Jewellers Cut Inventory, Shift to Custom Orders and Export Focus

With domestic demand falling, Armenian manufacturers have slashed inventory, pivoting toward custom designs and export contracts. Gold is now treated more like a financial instrument by their foreign buyers, rather than an ornamental commodity. As jeweller Gor Sargsyan explains, lighter designs and one-off commissions have replaced high-volume production. Despite reduced sales, firms remain afloat thanks to stable foreign demand and the ability to pass rising costs onto overseas clients.

Retail Market Suffers as Sellers Move Online to Survive

On the retail front, sellers in Yerevan’s gold market are increasingly dependent on digital channels. Facing higher stall rental fees and tax burdens, vendors like Naira have returned to Instagram and Facebook to maintain visibility and move stock. With average purchases around 100,000 drams (~$260), heavier and higher-priced items remain unsold, and tax reforms have eroded profit margins. Calls for government intervention to support micro-businesses are growing louder, particularly in light of abandoned tax incentives that previously helped offset gold’s rising cost base.

Economists See No Gold Windfall for Armenia Despite Global Rally

Despite the historic rally, Armenia has failed to capitalize on the rising price of gold. Economist Armen Ktoyan argues that the country’s lack of sovereign gold reserves leaves it with no hedge or leverage from global price moves. While Armenia previously acted as a transit hub for Russian gold exports to the UAE, data shows a decline in trade volumes. With jewellery production a declared strategic industry, missed export potential has become a concern. Rising costs without corresponding export expansion risk exposing Armenia’s manufacturers to losses in a volatile global pricing environment.

XAU/USD Faces Macro Conflict: Strong Real Yields vs Weak Demand

Even with Fed rate cut speculation growing, real yields remain elevated, a condition that historically suppresses gold’s performance. Unlike prior rate pivot cycles, this one lacks urgency—leading to a slow and grinding erosion in gold prices rather than an immediate reversal. Analysts at City Index and FOREX.com see the current pullback as a valuation reset, rather than a panic move. Without strong risk-off flows or clear Fed commitment, gold remains capped below its recent high-water mark.

Near-Term Outlook Eyes $3,175 as Downside Pivot, $3,400 as Bullish Break

All eyes are now on whether the $3,200–3,210 range holds as a medium-term floor. Below that, the $3,000 level remains structurally important due to its psychological weight and historical price memory. On the upside, a reclaim of $3,324, followed by a push through $3,368, would be needed to shift sentiment back toward the $3,400–3,500 zone. Without those breaks, gold remains vulnerable to further compression—caught between fading geopolitical tension and Fed hesitation.

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