By Linh Tran, Market Analyst at XS.com
Gold recorded its second consecutive recovery session and is currently trading around USD 4,970 per ounce, indicating that dip-buying demand remains present after the sharp sell-off that previously pushed prices down toward USD 4,400 per ounce.
The current price action suggests that market sentiment has gradually stabilized, as investors begin to reassess the recent decline as being relatively rapid and driven more by technical factors rather than a fundamental deterioration in underlying conditions.
Support for gold’s rebound has primarily come from the relative weakness of the U.S. dollar compared with January levels, despite a technical rebound in the DXY over recent sessions. The inability of the dollar to sustain a strong upward trend has improved gold’s appeal as a defensive asset. In this context, gold continues to serve as a risk-balancing instrument amid persistent uncertainties in the global macroeconomic environment.
Beyond monetary factors, safe-haven demand remains a key pillar supporting gold prices. Global markets are still influenced by multiple unpredictable elements, including an uncertain economic growth outlook, policy-related risks, and geopolitical tensions that have yet to fully ease. These conditions encourage investors to maintain exposure to defensive assets, with gold retaining a central role. Meanwhile, the ongoing net purchasing trend by central banks since 2022 continues to provide an important structural floor for the precious metal.
That said, it is important to note that gold price volatility remains elevated, suggesting that the market has not fully exited its sensitive phase. The current recovery could still face short-term profit-taking pressure, particularly as prices approach key psychological levels such as USD 5,000 per ounce. Moreover, a stronger rebound in the U.S. dollar or U.S. economic data that significantly exceeds expectations could weaken safe-haven demand and place renewed downward pressure on gold prices.
In the near term, in my personal view, gold is likely to remain in a consolidation phase around the USD 4,900–5,000 per ounce range, with a cautiously constructive bias. For a more sustainable uptrend to take shape, the market will require clearer signals from Federal Reserve policy, as well as further developments in the U.S. dollar and Treasury yields. For now, gold continues to suit its defensive role, though investors should remain mindful of heightened short-term volatility risks.