Technical analysis of Gold (XAU/USD): Assessing the potential for a bullish reversal following a recent corrective decline within the major uptrend.
Since March 2025, the yellow metal has rallied as expected and surpassed the medium-term resistances of US$3,030 and US$3,092. It extended its bullish impulsive up move sequence to hit a fresh all-time high of US$3,500 on 22 April 2025.
Thereafter, Gold (XAU/USD) staged a -10% corrective decline to print an intraday low of US$3,120 on 15 May 2025, within its ongoing major uptrend phase. This was triggered by a revival of the US dollar and risk-on sentiment due to optimism arising from the de-escalation of US-China trade tensions.
Fig 1: Gold (XAU/USD) medium-term trend as of 16 May 2025 (Source: TradingView)
Interestingly, in the past week, several technical conditions have emerged to suggest that the bearish momentum of the corrective decline from 22 April to 15 May has eased, where the next price movement of Gold (XAU/USD) may stage a bullish reversal.
Firstly, the corrective decline has managed to stall right at the rising 50-day moving average, acting as an intermediate support at around US$3,130 on 15 May, thereafter price actions staged a rebound of 3.8% before a retest on the 50-day moving average on Friday, 16 May, and formed a “higher low”.
Secondly, the 4-hour RSI momentum indicator has flashed out a bullish momentum breakout after hitting its oversold region reinforcing a potential bullish reversal condition.
Watch the US$3,056 key medium-term pivotal support, and a clearance above US$3,305 (also the 20-day moving average) sees the next medium-term resistances coming in at US$3,435 and US$3,500.
On the flip side, failure to hold at US$3,056 invalidates the bullish reversal scenario for an extension of the corrective decline sequence to expose the next medium-term support at US$2,955.
