Gold Snaps, XAU/USD Working First Red Week of 2025

Gold Talking Points:

• Gold prices have continued to struggle ahead of a $3k test as the $2,950 level has held resistance yet again so far this week.
• Gold built a bull pennant in Q4 and then broke out of that in a very big way in early-2025 trade, with eight consecutive weeks of gains. But that streak looks as though it will come to an end as the current weekly bar is red and several supports have been broken.
• I look at gold in-depth each Tuesday in the weekly webinar, and you’re welcome to join. Click here for registration information.

Gold prices appear to be headed for their first red week in 2025. This goes along with a sizable move-down in Bitcoin and several other markets, although the bullish trend leading into this retracement was more consistent in gold.

Gold prices showed a trough-to-peak rally of 40% last year before topping in late-October. The election brought a sizable pullback and that sell-off ran for about a week after. But the rest of the year then showed both lower-highs and higher-lows, making for a symmetrical triangle formation that when matched with the prior bullish trend, set up a bull pennant.

The breakout from that bull pennant formation was incredibly consistent and clean, as gold has posted eight consecutive weeks of gains while making a fast run at the next major psychological level of $3k. But that’s where matters have started to shift as the minor psychological level below that, at $2,950, has become a stumbling block that bulls haven’t yet been able to take-out.

Bulls shied away from a test there two weeks ago, and then that level held the highs last week and again so far this week; and now prices are pulling back and taking out several shorter-term supports along the way.

Gold Weekly Price Chart

Chart prepared by James Stanley; data derived from Tradingview

Gold $3k Dynamics

I wrote about this on Monday as gold had just set another fresh all-time-high, but the point remains a few days later after a sizable pullback, and that’s the fact that a major psychological level like $3k/oz could take some time for gold to finally gain acceptance above. I said that on Monday fully realizing the momentum that had held so far in 2025 trade for the long side of gold, but from the prior tests at both $1k and $2k, we can see where gold had trouble holding momentum through initial tests of those big figures.

While the sample size is small, the fact of the matter is that a major psychological level of that nature can often take time to gain acceptance from the market. Like we saw in the summer of 2020, when FOMC policy was pedal-to-the-floor with accommodation, gold’s first test above $2k couldn’t continue as a combination of profit taking and lessened enthusiasm above the level took-hold.

That $2k level held as resistance for three-and-a-half years, all the way into December of 2023. And then early last year, that price had started to show as shorter-term support and this was very much helped along by a dovish FOMC in spite of strong inflation data. There was just two daily closes below that level for spot gold, but it’s perhaps no coincidence that a comment from Chicago Fed President Austan Goolsbee last year helped to propel gold back above that price, on the way to a 40% rally into the October highs.

Once gold could finally gain acceptance above $2k it was able to run quickly-higher; but that acceptance still took time and as I wrote on Monday, I anticipate something similar as the $3k level was coming closer to in-play.

Perhaps more to the point, there’s also the possibility of $3k coming into play without that price actually having traded. This would be similar to what happened in 2011, when gold prices stalled less than $80 away from the $2k/oz level before ultimately retracing by more than 45.52% over the next four years.

And perhaps coincidentally, the low in gold showed right around the time the Fed hiked rates for the first time since the Financial Collapse in December of 2015.

Gold Monthly Chart

Chart prepared by James Stanley; data derived from Tradingview

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Gold Shorter-Term

It’s been a brutal week so far in gold and the question now is whether bulls use bounces to take profits on longer-term positions, which could further the streak of lower-lows and highs that have posted so far this week.

The $2,900 level remains of interest for the weekly close, as it would be a positive sign if bulls are able to push gold prices back above that level before the end of the week. If they can, then I think the door would remain open for a possible test of $3k in the near-term; but if they can’t, a deeper retracement scenario is going to look more likely.

At this point, gold has retraced 23.6% of the move that’s built since the December low, and that Fibonacci retracement level is what’s helping to set the low for today, so far. That spots at 2,868, and lower-high resistance potential exists at prior support, from around 2,892.

If bulls can nudge above that spot, the door would open for re-test of the 2,900 psychological level, and above that, the next spot of key resistance is a spot of support-turned-resistance at 2,918. If bulls are able to push back above 2,900, that’s the level that I would like to see come into play, and this could even be incorporated for bullish strategies as that would set the stage for possible short-term higher-low support at either 2,900 or 2,892.

But, for now, bears are driving shorter-term price action, and for next support I’m tracking a zone of resistance-turned-support from 2,830-2,834.

Gold Four-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist