Gold forecast: XAU/USD rebounds but can gold miners finally catch up?

This morning was all about defensive stocks, as the likes of BAE Systems and Rheinmetall surged to send some of Europe’s major indices like the DAX and FTSE to new all-time highs. After Trump and Zelensky’s televised clash on Friday, most European countries have showed strong support for Ukraine with the UK promising to provide continuation of military aid, boosting the country’s defence capabilities and developing a "coalition of the willing" to defend Ukraine. As a result, investors have snapped up shares of defensive companies of expectations of increased military spending by governments. The developments have also helped to trigger a rebound in gold prices, after last week’s decline, which ensured a red weekly close. Intriguingly, several gold miners staged a rally on Friday, hinting that they may finally be ready to play catch-up with the underlying precious metal. As we head into a fresh trading week, attention remains firmly on geopolitical tensions in Ukraine and ongoing tariff discussions. Additionally, the European Central Bank is set to announce its latest interest rate decision, while a slew of key US macroeconomic data—culminating in Friday’s non-farm payrolls—will provide further direction to impact the gold forecast.

Technical gold forecast: XAU rebounds after retreating from overbought levels

A sharp recovery in US stock markets on Friday saw appetite for safe-haven assets wane, sending gold lower. The metal registered a 2.65% weekly loss—its first decline after eight consecutive weekly gains—as it retreated from severely overbought conditions. While gold has started this week on a firmer footing, the key question remains: can it sustain these gains, or will last week’s bearish signal pave the way for further declines? As I have repeatedly noted in recent weeks, a correction was long overdue to relieve extreme overbought conditions, even if I still anticipate gold to eventually push past the $3,000 mark.

Source: TradingView.com

On longer-term charts, gold remains overbought and still requires further consolidation or a price dip. However, on the daily time frame, the RSI is now sitting around 50 to 55, i.e., in neutral territory. That said, the breakdown of prior support zone at $2,877–$2,900 remains a concerning technical development insofar as the short-term XAUUSD forecast is concerned for the bulls. Unless gold swiftly recaptures this area today or later on in the week, a further decline towards $2,790 remains plausible, with even deeper support in the $2,710–$2,725 region also in play should selling pressure persist.

As a long-term gold bull, I would welcome a deeper pullback. It would allow stretched technical conditions to reset while also presenting an attractive entry point for those who have so far been reluctant to chase the rally.

GDX: A Glimmer of Hope for Gold Miners?

Friday’s price action in gold mining stocks and ETFs was particularly interesting. Despite gold declining, gold miners rallied—perhaps signalling a long-awaited turnaround in a sector that has struggled to keep pace with bullion’s meteoric rise.

The VanEck Gold Miners ETF (GDX), one of the most widely followed gold mining ETFs, invests primarily in common stocks and depositary receipts of gold companies. Investors seeking exposure to gold through ETFs have faced disappointment, as GDX has consistently lagged behind the underlying metal. Despite gold repeatedly setting new highs in recent years, GDX remains a long way off its 2011 peak of $66.98 and has yet to even surpass its 2020 high of $45.78, let alone last year’s high of $44.22 set in October.

Source: TradingView.com

Nevertheless, the trend remains constructive. GDX is trading above its 200-day moving average and continues to print higher lows. On Friday, the ETF bounced precisely at key support within the $38.00–$39.00 region, where it initially gapped lower before rallying into the close. This bullish price action may indicate that GDX is finally gearing up to catch up with gold’s performance. The coming weeks will be crucial in determining whether this long-overdue move materialises.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

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