Spot gold falls over $5 in the short term, now at $3,296 per ounce.

Spot gold falls over $5 in the short term, now at $3,296 per ounce.

Spot gold prices have experienced a notable decline, falling by more than $5 to settle at $3,296 per ounce on Tuesday, May 28, 2025. This significant drop comes amidst heightened geopolitical risks and ongoing trade tensions between major economies.

The current gold price is a reflection of the broader market sentiment, which has shifted towards a more risk-on approach following the U.S. delay in imposing new tariffs on the European Union. The delay, announced by President Donald Trump, has been credited for the recent rally in stocks and cryptocurrencies, while gold prices have been pressured downwards.

The Federal Reserve's cautious stance on interest rates and the potential for economic growth have also contributed to the downward pressure on gold. The central bank has maintained a cautious outlook, with Fed Chair Jerome Powell emphasizing that a preemptive rate cut is not under consideration. This has dampened the appeal of gold as a safe-haven asset.

Gold's historical performance has been strong, with the commodity increasing by 699.87 USD/t oz. or 26.67% since the beginning of 2025, according to trading data on a contract for difference (CFD) that tracks the benchmark market for this commodity [1]. Despite recent losses, gold remains on track for a weekly gain.

Gold prices are expected to stabilize around current levels, with a strong potential for range-bound trading between $3,100 and $3,500 in the second half of 2025, according to Citi's latest forecast [2]. The investment bank attributes the bullish revision to escalating tariffs and heightened geopolitical risk, which have driven demand for the safe-haven metal.

Looking ahead, the political situation remains volatile, and gold prices are likely to continue to be influenced by trade policy developments and the Federal Reserve's monetary policy stance. The outlook for gold is clouded by the potential for economic growth and related equity risks to unwind as the U.S. midterms approach and the Federal Reserve cuts rates.

References:
[1] https://tradingeconomics.com/commodity/gold
[2] https://www.mining.com/citi-adjusts-short-term-gold-price-forecast-back-to-3500/
[3] https://www.marketwatch.com/livecoverage/stock-market-today-dow-eyes-350-pont-gain-s-p-and-nasdaq-to-follows-after-trump-tariff-delay/card/gold-prices-fall-2-as-market-goes-fully-risk-on--r760RgYB2wgAMfNV3o0q
[4] https://finimize.com/content/indian-rupee-holds-steady-despite-market-fluctuations