Gold Price Analysis: Critical Pattern Signals Major Market Shift

Gold price analysis reveals a significant market reversal signal as prices settled at $3,247.40, declining just $0.90 on Friday, following a tumultuous week marked by substantial cumulative losses of $82.80. Friday’s modest movement stands in stark contrast to the dramatic midweek plunges, when gold tumbled $27.20 on Tuesday, followed by drops of $28.40 on Wednesday, and most notably $50.90 on Thursday. Technical analysts have identified this precise price action as a “Three River Evening Star” pattern – a bearish reversal formation typically emerging after extended uptrends, suggesting possible further declines ahead.

Gold currently trades approximately $300 below its April 22 peak of $3,500.05, while facing mounting pressure from rising U.S. Treasury yields and a strengthening dollar. Stock markets demonstrated remarkable resilience during this period, with the Dow Jones Industrial Average gaining 1,200 points (2.99%) for the week and the NASDAQ Composite advancing 3.39%. Despite the stronger-than-anticipated U.S. jobs report showing an increase of 177,000 positions versus the 133,000 forecast, gold now sits at a critical technical juncture that demands careful attention from traders and investors. The coming week’s price action holds particular importance, as downward movement would confirm the bearish pattern and potentially signal a deeper correction rather than temporary consolidation. This technical formation, combined with changing market sentiment, suggests gold may experience continued selling pressure as traders reassess their positions.

Gold ends week flat despite volatile midweek swings

_{Image Source: FOREX.com}

The precious metal demonstrated remarkable volatility throughout the trading week, yet closed nearly flat by Friday’s session. Following dramatic price swings and substantial midweek losses, gold managed to stabilize and recover partial ground as the week concluded, highlighting the complex interplay of market forces currently driving the commodity’s performance.

Price closes near $3,247 after $82 drop earlier in the week

Gold achieved a modest recovery during Friday’s trading, reaching $3,257.60 per ounce, gaining $9.16 for the session [9]. This uptick materialized as strategic buyers entered the market following the metal’s worst weekly performance in over two months [7]. Despite recent turbulence, gold futures have maintained an impressive 23.43% increase since the beginning of 2025, demonstrating substantial underlying strength amid heightened market volatility [7].

The week’s trading exhibited exceptional turbulence, with gold prices retreating sharply from their record high of $3,500.05 established on April 22 [7]. Wednesday’s decline proved particularly significant, with prices plummeting $125.30, representing a 3.7% single-day loss—the steepest daily percentage decrease since June 2021 [7].

The precious metal’s price movements have grown increasingly erratic during recent sessions. Market analysts note that daily price swings of $25 to $50 have become standard in the gold market [7]. These substantial intraday fluctuations reflect gold’s heightened sensitivity to rapidly evolving economic indicators and shifting geopolitical developments.

Friday’s muted move contrasts with sharp declines on Tue–Thu

Friday’s relative stability stood in marked contrast to the tumultuous trading sessions earlier in the week. Following a new record opening price of $3,194.20 on Friday morning [8], gold markets experienced comparatively subdued trading compared to the pronounced declines observed Tuesday through Thursday.

During those three consecutive sessions, the metal encountered significant selling pressure, causing prices to retreat substantially from recent peaks. Market experts attribute this abrupt reversal to several key factors, including:

1. Improved trade sentiment – Hopes for tariff agreements between the U.S. and trading partners prompted investors to reduce safe-haven positions [5]
2. Absence of major market participants – The Labor Day holiday in China removed significant buyers from the market, contributing to heightened volatility [9]
3. Profit-taking behavior – Following the rapid ascent to record highs, many investors chose to secure gains [9]

Friday’s trading displayed what market technicians identify as “bargain hunting,” as strategic buyers who had been observing from the sidelines stepped in to acquire gold at relatively lower prices [9]. This buying behavior helped stabilize the market following the sharp midweek correction.

“Gold remains confidently in a bull market,” stated one analyst, suggesting that while the metal may “trade sideways for a bit given the recent sharp rally,” the overall positive trend remains intact [7]. Gold’s year-to-date appreciation stands at an impressive 38% [8], signaling substantial strength despite the recent pullback.

Looking ahead, market participants will carefully monitor U.S. economic indicators, particularly those related to inflation and employment, as these data points have consistently shaped gold’s price trajectory throughout 2025 [5].

US jobs data and trade talks shift market sentiment

“Gold’s role as a safe haven is being reasserted in an era of fragmented global trade.” — Discovery Alert Research Team, Market analysis team at Discovery Alert, specializing in precious metals research

Recent economic indicators have significantly altered gold market dynamics, with stronger employment figures and improving trade prospects redirecting investor sentiment toward riskier assets. Gold’s remarkable upward momentum has encountered substantial resistance as market participants reevaluate economic conditions amid changing geopolitical landscape. The precious metal’s traditional safe-haven appeal has diminished temporarily while equity markets demonstrate renewed strength.

Nonfarm payrolls beat expectations with 177,000 jobs

The Bureau of Labor Statistics reported that U.S. nonfarm payrolls increased by 177,000 jobs in April, substantially exceeding the consensus forecast of 130,000 [7]. This positive employment data followed a downwardly revised figure of 185,000 jobs added in March [6]. The unemployment rate remained steady at 4.2%, perfectly matching analysts’ expectations [6]. Beneath these headline figures, wage growth displayed signs of moderation, with average hourly wages increasing by just 0.2% month-over-month, falling short of the anticipated 0.3% gain [8]. Over the past 12 months, average hourly earnings have risen by 3.8% [8].

This better-than-expected employment report delivered much-needed market reassurance following concerning labor market signals earlier in the week. Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, observed that “the latest employment data is providing a much-needed balm for markets,” while cautioning that “tariff uncertainty continues to pose a significant risk for financial markets” [8]. The jobs report’s stronger performance has directly impacted gold’s appeal as investors recalibrate their risk assessments and portfolio allocations.

China signals openness to trade talks amid tariff tensions

China’s commerce ministry confirmed a potentially significant development for gold price dynamics, stating that the United States has repeatedly expressed willingness to negotiate on tariffs, adding that “Beijing’s door is open for talks” [7]. This statement marks a notable softening in China’s position compared to last week, when officials insisted that negotiations couldn’t proceed until the U.S. removed heavy tariffs [9]. According to reports from both Bloomberg and the Financial Times, the Trump administration has initiated contact with Beijing to begin tariff discussions [9]. While Chinese state media indicated that China “isn’t in a rush to negotiate and won’t engage unless the U.S. takes meaningful actions,” they also acknowledged that “there’s no harm for China in talking if the U.S. wants to” [9].

U.S. President Trump expressed optimism about reaching trade agreements with several countries, indicating a “very good chance” of securing a deal with China [7], suggesting that agreements could be reached with India, Japan, and South Korea [7], and his administration reportedly nears announcements to reduce planned tariffs against some countries [7]. These diplomatic developments have created ripple effects throughout financial markets, with gold experiencing selling pressure as its crisis-hedge appeal diminishes amid improving international relations.

Stock markets rally as risk appetite returns

As trade tensions appeared to ease, equity markets responded with decisive strength. U.S. stocks jumped more than 2% after Treasury Secretary Bessent called the tariff standoff “unsustainable” [7]. Following the strong jobs report, S&P 500 futures climbed an additional 1% [8]. This improving sentiment has directly impacted gold prices, which were down 0.4% at $3,228.50 per ounce as of May 2 [7]. On a weekly basis, the metal declined 2.6% from its April 22 record high of $3,500.05 [7].

Daniel Pavilonis, senior market strategist at RJO Futures, suggested that “$3,500.00 may be a top for gold for a little while, especially if some trade deals start to come through and risk appetite strengthens” [7]. He added that with safe-haven demand waning, “prices could ease back even more and potentially break this week’s support near the $3,200.00 area” [7]. According to market experts, as long as risk sentiment continues to improve, gold bulls will face significant obstacles in maintaining price momentum [9]. Traders should closely monitor the crucial support level at $3,167, which corresponds to the April 3 swing high that followed universal tariff announcements [9].

The relationship between employment data and gold prices follows well-established market patterns. Positive job reports typically boost investor confidence and risk appetite, often reducing demand for safe-haven assets like gold [32]. Strong employment figures can influence Federal Reserve monetary policy decisions, potentially strengthening the U.S. dollar and further pressuring gold prices [32]. This economic interconnection explains gold’s recent price weakness despite its impressive year-to-date performance.

Technical pattern forms bearish signal on gold chart

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Gold’s recent price action reveals troubling technical formations that expert chartists recognize as potential harbingers of further price declines. The daily chart displays a specific candlestick pattern that demands serious attention from traders monitoring the precious metal’s next directional move. This particular formation, rarely seen but highly significant, suggests gold may be preparing for a substantial downward move that could accelerate in coming sessions.

Doji candlestick appears after strong uptrend

A textbook doji candlestick materialized on gold’s chart following its spectacular rally to all-time highs. A doji occurs when opening and closing prices sit at virtually identical levels during a single trading session [12]. Japanese technical analysis places special emphasis on this formation, focusing primarily on the relationship between session opening and closing prices rather than day-to-day closing price comparisons [12].

The appearance of this doji following gold’s vigorous uptrend carries particular significance as it signals neither bulls nor bears could dominate price action during the session [12]. This precise type of market indecision typically manifests at crucial market turning points, serving as an early warning that the prevailing upward momentum may be exhausting itself [1]. Their expert technical analysts have identified this pattern as a reliable indicator of potential trend reversals, especially when appearing after extended price advances.

Three River Evening Star pattern suggests reversal

More concerning for gold bulls, the doji has formed part of a larger bearish formation known as the “Three River Evening Star” pattern. This sophisticated arrangement consists of three specific candlesticks in sequence: first a substantial green candle showing continued buying interest, followed by a small-bodied doji reflecting sudden market indecision, and finally a large red candle demonstrating renewed selling pressure [12].

This pattern has emerged exactly as described in technical analysis literature, following a defined uptrend precisely as required by textbook definitions [2]. Experienced chart analysts regard this formation as one of the most potent bearish reversal signals available, consistently ranking among the most reliable indicators of future price deterioration [13].

Last week’s tombstone doji adds further weight to the warning signs of potential bearish reversal [14]. The pattern appears complete with gold’s sharp decline following the doji, suggesting additional selling pressure may develop in coming sessions.

Confirmation needed with next week’s candle

Despite these concerning signals, prudent technical analysts emphasize that final confirmation requires next week’s price action. Specifically, “it is advisable to take the signal following a confirming candle” [2]. This typically means waiting for another red candle with a lower low than any of the previous three pattern components [2].

For gold traders evaluating potential positions, this bearish pattern carries substantial implications for market direction. Both daily and weekly charts now display bearish signals that could potentially trigger aggressive selling and magnify downside risk [15]. Nevertheless, disciplined market participants understand the importance of awaiting pattern confirmation before making definitive trading decisions based on technical formations alone. Their experienced analysts recommend closely monitoring price action at the start of next week for crucial directional clues.

Analysts debate whether correction or consolidation is next

“Gold price is very likely to decline in May 2025.” — GoldPriceForecast.com Analysis Team, Precious metals forecasting specialists at GoldPriceForecast.com

Market experts remain sharply divided on gold’s next move following its significant retreat from record highs. Professional analysts have presented contradicting views about whether a deeper correction or mere consolidation lies ahead for the precious metal, with compelling arguments supporting both scenarios.

Some expect deeper pullback toward $3,150

Several respected analysts anticipate further declines in gold prices after the recent bout of volatility. From a technical perspective, the sharp reversal has “raised the risk of a deeper correction” [16]. If bearish momentum continues to accelerate, support targets around $3,168 and potentially $3,075 could quickly come into focus for active traders [17].

Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, issued a clear warning that “gold may be showing early indications of weakness following its tremendous surge to record highs” [11]. This sentiment was echoed by Tata Mutual Fund, which noted that “gold has surged more than 25% in the past six weeks, and historically, such sharp rallies tend to consolidate over a 3–5 month window” [11]. These consistent warnings from market veterans suggest the potential for continued downward pressure.

Others see range-bound movement between $3,220–$3,270

Contrary to correction forecasts, several market watchers expect gold to enter a more moderate consolidation phase rather than a dramatic decline. Using Fibonacci levels as their primary guidance, these analysts note that “the gold price has so far managed to find support at $3,292, the 0.382 retracement level, which for now signals a weak correction within a strong uptrend” [16].

The precious metal has been trading in a tight zone under the $3,268 resistance level, with immediate support residing at $3,231, followed by $3,204 [18]. This technical configuration has led many experienced traders to believe the metal could remain range-bound between these clearly defined levels as markets digest the recent extraordinary gains.

Gold price forecast for next week hinges on Fed signals

The Federal Reserve’s upcoming rate decision emerges as the critical factor determining gold’s immediate trajectory. Market experts emphasize that “a shift toward dovish rhetoric could revive gold’s appeal” almost immediately [18]. Conversely, stronger-than-expected economic data might push Treasury yields higher, placing additional pressure on gold prices [4].

Gold’s recent price action reveals a pronounced tug-of-war between bulls and bears, with XAU/USD currently testing the technically significant 50-period EMA at $3,268 [18]. Any unexpected weakness in upcoming economic reports could prove surprisingly bullish for gold, whereas robust economic numbers may intensify selling pressure across precious metals [19].

Goldman Sachs’ maintained end-2025 gold price forecast of $3,300 per ounce stands as a noteworthy data point, suggesting the banking giant remains fundamentally optimistic about long-term prospects despite acknowledging the current short-term volatility [20]. This longer-term perspective provides essential context for traders attempting to navigate the immediate price fluctuations.

What traders should watch in the coming sessions

Gold traders need precise guidance as the metal approaches a critical decision point following last week’s dramatic price swings. With the bearish Three River Evening Star pattern now clearly visible on charts, identifying key price thresholds and understanding upcoming market catalysts becomes essential for positioning correctly in this increasingly volatile environment.

Key levels: $3,260 resistance, $3,220 support

Gold now faces a decisive battle at clearly defined price barriers that will determine its near-term trajectory. The $3,260 level stands as immediate resistance, with any sustained move above potentially triggering renewed bullish momentum [3]. Should this barrier fall, the yellow metal could quickly target the psychological $3,300 resistance zone [4]. On the downside, $3,220 represents vital support that, if breached, would likely accelerate selling pressure toward $3,150-$3,165 [3]. Technical analysis confirms the $3,220-$3,260 range forms the core battleground where bulls and bears are currently competing for market control [3]. The 50% Fibonacci retracement level at approximately $3,229-$3,230 provides an additional support cushion that traders should monitor closely for potential bounces [21].

Fed meeting and ISM data could trigger breakout

Next week’s economic calendar features several market-moving events that could determine gold’s direction:

• May 6: ISM Services PMI (forecast: 50.2, previous: 50.8) [4]
• May 7: Fed Funds Rate decision (expected: 4.50%, no change) [4]
• May 7: FOMC statement and Powell’s press conference [4]
• May 8: Weekly unemployment claims [4]

While no rate change is anticipated at Wednesday’s meeting, Chairman Powell’s tone during the press conference will significantly influence market sentiment and gold’s price response [4]. Currently, Fed fund futures show a 66% probability of rate cuts in June [22], though this outlook could shift dramatically based on Powell’s comments regarding inflation trends and economic growth projections in the coming quarters.

Gold buy or sell today? Depends on macro confirmation

Prudent investors should await definitive confirmation signals before committing capital in either direction. If gold successfully breaks above $3,260, experienced analysts suggest initiating cautious long positions targeting $3,300 as their first objective [3]. Conversely, if prices decline below the critical $3,220 support, this signals potential further weakness toward $3,150 [3]. Throughout this period of heightened uncertainty, remember that gold typically benefits from dovish Fed commentary [10] and disappointing economic data releases [21]. Avoiding premature breakout trades represents the most prudent strategy given the numerous volatility-inducing events scheduled for the coming week [4].

Conclusion

Gold’s recent price action unquestionably marks a pivotal moment for the precious metal. The formation of the “Three River Evening Star” pattern, coupled with gold’s sharp retreat from record highs, indicates bearish momentum may be building after an impressive uptrend. Though prices found stability around $3,247 by Friday, the technical damage inflicted by midweek selling warrants serious attention from traders and investors alike.

The $3,220-$3,260 range now represents the immediate battleground that will determine short-term direction. Breaking below support could accelerate selling pressure toward $3,150, while overcoming resistance might reignite bullish sentiment and push prices toward previous highs. Next week’s Federal Reserve meeting stands as the most significant catalyst on the horizon, with Chairman Powell’s commentary potentially triggering substantial price movements regardless of the widely expected unchanged rate decision. Their stance on inflation and economic growth projections could dramatically alter gold’s trajectory in the coming weeks.

Market sentiment has undeniably shifted as evidenced by the stronger-than-expected jobs report and improving trade dialogue with China. These developments have temporarily diminished gold’s safe-haven appeal among investors seeking higher returns in equity markets. Nevertheless, gold’s impressive 38% year-to-date performance demonstrates underlying strength despite recent volatility, suggesting the long-term bull market remains intact despite short-term turbulence.

Final confirmation of the bearish reversal pattern requires next week’s price action. Therefore, patience and disciplined risk management should take precedence over impulsive trading decisions based solely on the current technical formation. Gold’s immediate future faces competing bullish and bearish narratives, making continued volatility likely until either fundamentals or technicals provide definitive direction. Prudent traders will adapt their approach to these conflicting signals while maintaining appropriate position sizing during this period of heightened uncertainty. The metal’s established trading range offers clear levels for strategic entry and exit points as the market determines its next major move.