Gold Retreats from Near Four-Week Peak as Dollar Ticks Up

Date: June 3, 2025
Byline: Prasad Bhave

Gold Slips from Recent Highs Amid Dollar Rebound

Gold prices eased on Tuesday after touching their highest level in nearly four weeks in the previous session. The retreat comes as the U.S. dollar edged higher, weighing on the appeal of the precious metal for holders of other currencies.

Spot gold was down 0.3% at $2,348.10 per ounce by 12:30 PM GMT, retreating from Monday’s high of $2,358.80 — the strongest level since early May. U.S. gold futures also declined by 0.4% to $2,351.60 per ounce.

The U.S. dollar index rose 0.2% on the day, snapping a three-session losing streak and strengthening against major currencies. A firmer dollar makes gold more expensive for non-U.S. investors.

Dollar Strength Reasserts Pressure

“Gold's brief flirtation with a near-term breakout has been blunted by a modest rebound in the dollar,” said Carlo Thompson, commodity strategist at Raymond James. “With no immediate economic shocks, investors are back to monitoring the greenback and rate outlook.”

The dollar’s uptick comes ahead of several key macroeconomic events, including the U.S. jobs report due Friday, which is expected to shape the Federal Reserve’s near-term policy direction. Traders are pricing in about a 56% chance that the Fed will begin cutting rates in September, according to CME FedWatch data.

Fed Policy in Focus

While inflation appears to be easing gradually, Fed officials have continued to adopt a cautious stance on rate cuts. Last week, several policymakers reiterated the need for more evidence that inflation is sustainably moving toward the central bank’s 2% target.

“Gold remains highly sensitive to interest rate expectations,” noted Ananya Desai, senior analyst at Kotak Securities. “With no firm commitment from the Fed on timing, the market is reacting to each data point, and that includes renewed dollar strength.”

Lower interest rates typically support gold prices by reducing the opportunity cost of holding the non-yielding asset. However, until clearer signals emerge from the Fed, gold may remain range-bound.

Geopolitical Underpinnings and Demand Trends

Despite today’s retreat, gold remains elevated compared to early-year levels, bolstered by continued central bank buying and geopolitical uncertainties. Ongoing tensions in the Middle East and global election-related volatility — including outcomes from India, South Africa, and the European Union — have kept gold in favor as a hedge.

Moreover, physical demand in key markets such as China and India remains supportive. According to the World Gold Council, central banks added over 33 tonnes of gold in April, led by Turkey, India, and China — a continuation of a multi-month trend that has provided a strong floor for prices.

Technical Perspective and Key Levels

From a technical standpoint, analysts suggest that gold needs to convincingly break above the $2,360-$2,370 resistance range to resume its upward momentum.

“Unless gold can push through and close above the $2,370 level, we might see some consolidation around the $2,320-$2,340 range,” said Emily Zhou, technical analyst at FXStreet. “That said, dips are likely to be bought into, especially if macro conditions remain uncertain.”

Support is seen at around $2,320, with stronger support near $2,300 — a psychologically important level.

Investor Outlook: Watchful but Bullish

Despite the short-term retreat, many investors maintain a cautiously bullish outlook on gold.

“The underlying drivers for gold remain intact — central bank accumulation, sticky inflation in some regions, and geopolitical unpredictability,” said Michael Grant, portfolio manager at Black Oak Capital. “While we may see more volatility this summer, the broader trend still supports higher gold prices by year-end.”

ETF flows, a barometer of institutional interest, have remained steady, although not aggressively positive. Holdings in SPDR Gold Shares, the world’s largest gold-backed exchange-traded fund, rose marginally on Monday.

Conclusion

Gold’s pullback from a near one-month high reflects shifting sentiment driven by the dollar’s strength and the ever-watchful eye of investors on Fed policy cues. While short-term technicals suggest caution, the medium-to-long-term outlook remains constructive amid enduring geopolitical risks and strong central bank demand.