Gold price forecast 2025: 5 key reasons why gold dropped from $3,500 to $3,211 — will it fall below $3,200 next week or bounce back stronger?

Gold prices took a step back this week after climbing to record highs last month, as signs of easing trade tensions and a strong U.S. jobs report pushed investors away from the safe-haven metal. Spot gold dropped to its lowest in two weeks on Thursday before bouncing slightly on Friday, but the metal still appears headed for its second weekly loss in a row.

At 9:41 a.m. ET on Friday, spot gold was up 0.5% at $3,255.01 per ounce, a modest rebound after falling to $3,211.53 on Thursday—its lowest since April 14. Despite Friday’s gain, gold prices are still down 2.1% for the week, after reaching a record high of $3,500.05 per ounce on April 22. Meanwhile, U.S. gold futures climbed 1.3% to $3,262.10.

Why did gold drop after reaching record highs?

Gold hit a wall this week mainly due to improving market sentiment around global trade talks. On Thursday, U.S. President Donald Trump said trade deals with India, Japan, South Korea, and even China are on the table. He mentioned there's a “very good chance” of reaching an agreement with Beijing.

This followed a message on Chinese state-affiliated social media, claiming the U.S. had approached China to reinitiate discussions around Trump's steep 145% tariffs. These signs of easing tensions prompted investors to shift back toward riskier assets like stocks, pulling money out of gold.

Bob Haberkorn, senior market strategist at RJO Futures, said, “There’s hints of upcoming trade deals... a risk-on trade is going on, leading to some profit-taking in gold’s safe-haven.”

Also Read: Gold prices rise ahead of Fed decision: Is the rally a signal of inflation fears and global uncertainty?

How did China’s holiday affect gold prices?

Adding to the pressure, China’s markets were closed from May 1 to May 5 for the Labour Day holiday. This meant lower buying activity from the world’s biggest gold consumer.

TD Securities noted that gold was being “sucked into China’s holiday-induced liquidity vacuum,” further reducing demand during a critical time when market confidence was shifting.

What impact did the US jobs report have on gold?

Investors were also eyeing the U.S. nonfarm payrolls report released on Friday. The economy added 177,000 jobs in April, slightly down from 185,000 in March (which was revised lower). Still, the number beat Reuters’ forecast of 130,000, showing a labor market that remains stronger than expected.

Even though this jobs data is backward-looking, it helped cool expectations that the Federal Reserve might cut interest rates as early as June. As a result, yields on 10-year Treasury bonds rose, which tends to reduce the appeal of non-yielding assets like gold.

Is gold still supported in the long run?

While this week’s pullback has made headlines, analysts believe the long-term support for gold remains strong. Ole Hansen, head of commodity strategy at Saxo Bank, noted that despite the dip, “the structural drivers underpinning gold’s strength remain firmly in place.”

These include:

• Ongoing global geopolitical uncertainty
  
  
• Sticky inflation above the Fed’s 2% target
  
  
• High government debt and interest rate sensitivity in markets
  
  

Until the Fed sees clearer signs of inflation easing or a weakening job market, interest rates are likely to stay steady. That could support gold prices over time, even if short-term corrections occur.

How are other precious metals performing this week?

Gold wasn’t the only metal under pressure. Here’s how the rest of the precious metals complex looked:

• Spot silver fell 1.4% to $32.13 on Thursday but edged just 0.1% lower to $32.35 by Friday morning.
  
  
• Platinum dropped 0.6% to $961.05 on Thursday but rose 1% to $967.70 on Friday.
  
  
• Palladium gained 0.4% on Thursday and added another 0.9% on Friday, reaching $949.00.
  
  

Still, all three metals were on track for weekly losses, following gold’s lead.

Despite this week’s dip, gold remains a key player in the global market, especially amid uncertainty. Investors are keeping an eye on upcoming Fed decisions, geopolitical news, and whether trade talks between the U.S. and China truly gain traction. While we may have seen a short-term top at $3,500, the long-term story for gold is far from over.