Gold Rebounds: May 19 Market Analysis as Prices Recover from Weekly Lows

Gold prices have rebounded in early trading on Monday, May 19, 2025, after experiencing their worst weekly performance since November 2024. As of 06:50 UTC, spot gold is trading at $3,216.63, with prices ranging between $3,207.22 and $3,249.84 during the morning session.

This recovery comes after gold suffered a steep decline last week, falling more than 3% and briefly touching $3,147.85 per ounce on May 15, as shown in the TradingView chart.

Market Movement and Key Drivers

Weekend Developments

The weekend brought significant developments that have reignited safe-haven demand for gold. Most notably, Moody’s downgraded the US sovereign credit rating by one notch on Friday, becoming the last major ratings agency to do so.

This downgrade cited growing concerns over America’s mounting debt pile, which has put upward pressure on gold prices as investors seek safety.

Additionally, US Treasury Secretary Scott Bessent reaffirmed in Sunday television interviews that President Trump would impose tariffs at previously threatened rates on trading partners that don’t negotiate in “good faith”.

This renewal of trade tension rhetoric has partially reversed the optimism that followed last week’s US-China trade agreement.

Previous Week’s Performance

Last week saw gold experience its worst weekly decline since November 2024, with prices falling over 4.25%. The primary catalyst for this decline was the announcement of a 90-day pause in the US-China trade conflict, which sparked a risk-on sentiment across markets.

Jim Wyckoff, senior analyst at Kitco Metals, noted that “The easing of the US-China trade conflict has rekindled risk appetite throughout the broader market”.

Global Market Overview

United States

In the US, gold futures have gained 1% to reach $3,219.20. The dollar index has fallen by 0.3% on Monday, making gold more affordable for international buyers.

This weakness in the dollar, combined with the Moody’s downgrade and renewed trade tensions, has provided support for gold prices.

Tim Waterer, Chief Market Analyst at KCM Trade, commented: “The downgrade and risk-off tone has given gold new life”. This sentiment reflects the market’s quick pivot back to safe-haven assets after last week’s risk-on mood.

Asia

In India, gold prices have risen according to FXStreet data, with prices standing at 8,848.04 Indian Rupees (INR) per gram. The domestic gold market in India continues to show strong demand despite high prices.

In Vietnam, domestic gold prices experienced a sharp decline last week. SJC gold bars are currently listed at 115.5-118.5 million VND/tael (buy-sell), unchanged from yesterday but down 4.5 million VND/tael for buying and 3.5 million VND/tael for selling compared to the beginning of last week.

The gap between domestic Vietnamese gold prices and international prices remains significant, with SJC gold bars priced about 16.32 million VND/tael higher than international gold prices.

In China, strong investor demand continues to support gold prices. The inflow into physically-backed gold exchange-traded funds in April was the largest since March 2022, with China-listed funds leading the move.

China’s central bank also added gold to its reserves in April for the sixth straight month, according to official data from the People’s Bank of China.

Fundamental Analysis

Central Bank Demand

Central bank buying remains a key fundamental support for gold prices. Ole Hansen, head of commodity strategy at Saxo Bank, noted: “I wouldn’t be surprised if data indicates that this correction in gold we’ve seen right now has been cushioned by fresh and continued central bank demand”.

However, some analysts like Marc Chandler have warned that central bank demand could slow as prices remain near record highs.

Inflation and Interest Rate Expectations

Recent US economic data, including the Consumer Price Index (CPI) and Producer Price Index (PPI), have pointed to easing inflationary pressures. Additionally, disappointing US Retail Sales data has increased the likelihood that the US economy will experience several quarters of sluggish growth.

The University of Michigan’s Consumer Sentiment Index deteriorated further in May, dropping from 52.2 in April to 50.8 – the lowest level since June 2022. These indicators have reinforced market expectations for at least two 25-basis-point rate cuts by the Federal Reserve this year, which typically supports gold prices.

Technical Analysis

From a technical perspective, gold is currently in a descending channel. According to Central Charts analysis, the overall trend remains bullish, with 64.29% of moving average signals showing bullish tendencies. However, short-term indicators are giving mixed signals.

Key resistance levels to watch include $3,221 (immediate resistance) and $3,228, with a potential breakout target of $3,545 if the bullish momentum continues. On the downside, important support levels are at $3,145, $3,120, and the psychologically important $3,000 mark.

The Relative Strength Index (RSI) is currently back under 50, which is considered a bearish signal in the short term. The Williams %R indicator is oversold (under -80), suggesting a potential bounce.

Market Sentiment and Outlook

Market sentiment remains divided on gold’s short-term direction. A Main Street online survey found that 34% of investors expect prices to rise, 42% predict prices will fall, and 24% think prices will remain flat.

Some analysts remain bearish in the short term. Marc Chandler warned that if the $3,120/ounce level is broken, gold could face the risk of falling further to the $3,030-$3,045/ounce range.

Fawad Razaqzada, market analyst at City Index and FOREX.com, suggested that “while the long-term trend is still bullish, I wouldn’t be surprised if the bearish momentum continued for a few more days”.

However, others maintain a bullish outlook. Darin Newsom from Barchart.com remains optimistic, saying that central bank demand for gold could sustain the rally.

Nitesh Shah, commodities strategist at WisdomTree, stated: “Gold prices are more likely to rise than to fall from this stage onwards as other factors like central bank demand and very strong investor demand from China are not going away anytime soon”.

UBS analyst Giovanni Staunovo added a longer-term positive view: “Longer term, we remain constructive (on gold) from a hedging perspective as geopolitical tensions are unlikely to disappear completely, real interest rates are expected to decline, the US dollar is forecast to weaken, and central bank buying remains strong”.

ETF Flows and Investment Demand

Gold ETFs have seen significant inflows recently. According to World Gold Council data, April witnessed the largest inflow into physically-backed gold exchange-traded funds since March 2022, with China-listed funds leading the movement.

This strong investment demand, particularly from China, continues to provide underlying support for gold prices despite recent volatility.

JP Morgan’s recent commodity research suggests that redirecting just 0.5% of foreign US asset holdings to gold could drive prices to $6,000, highlighting the potential impact of even small allocation shifts toward gold in investment portfolios.

As markets navigate through this week, investors will be closely monitoring important economic reports such as US unemployment claims and home sales data, as well as statements from Federal Reserve officials for clues about future monetary policy direction.

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.