Gold price crashes again!? Here’s why the $3250 barrier just broke?

XAU/USD Analysis – Failed Break Above $3250, Signs of Renewed Downward Pressure

Overview (May 14, 2025)

XAU/USD (Gold/USD) is currently trading in the $3240 range, having once again lost momentum after failing to clearly break above the recent high around $3255. Based on the 1-hour (H1) chart, multiple technical indicators are aligning to signal a bearish outlook, confirming a gradual increase in downward pressure. In particular, the positioning of the moving averages (MAs), as well as the behavior of the ADX and DMI indicators, suggest a possible trend reversal. If the price decisively breaks below $3230, a downward move toward $3200 could become a realistic scenario.

Key Point 1: Moving Averages and Heavy Overhead Resistance

On the current chart, both the short-term 50-hour moving average (blue line) and the long-term 200-hour moving average (red line) are positioned above the price, forming a classic “death cross” structure. As a result, any attempt to rise is being strongly resisted by the 50MA, with multiple failed attempts to break higher.

Additionally, the candlestick bodies are becoming smaller, indicating weakening buying momentum. The recent bearish candle, in particular, came with a long upper wick, showing that the price was sold off from higher levels and confirming the heaviness of resistance.

Key Point 2: ADX and DMI Indicate Diminished Momentum and Potential Restart

The ADX (Average Directional Index) is currently trending sideways to slightly higher, hovering around the 0.10–0.15 range. While a clear trend has not yet emerged, the ADX is beginning to rise again as the price tests the downside, suggesting a quiet phase just before a new trend forms.

As for the DMI (Directional Movement Index), the -DI (red line) is maintaining dominance over the +DI (green line) despite some crossover, indicating that the bearish bias continues. If this condition persists, a breakout above 0.20 on the ADX could mark the start of a stronger downtrend.

Key Point 3: Volume Quieting Down, Sign of Imminent Large Orders

Volume spiked during the previous drop but has since calmed down, which can be interpreted as an accumulation phase. Such low-volume periods often precede a significant expansion in volatility, so caution is advised.

If volume spikes again during a breakdown below $3230, it could trigger a breakout-style selloff, providing an ideal entry opportunity for short-term traders.

※Image source: cTrader platform

Outlook and Trading Strategy

XAU/USD is at a potential turning point, with the following price levels being key to determining whether a trend reversal or continuation will occur. Pay special attention to the technical responses around these levels:

• Support at $3230: A decisive break below this level may lead to a sharp decline toward $3200 in the short term.
• Resistance zone at $3255–$3260: Even if a short-term rebound occurs, selling pressure is likely to increase in this zone.
• ADX behavior: If the ADX rises above 0.20, it would confirm a sell trend, making trend-following short strategies highly effective.

Trade Scenario Examples

Bearish Scenario (Looking for Downside)
Entry: Enter short after confirming a break below $3230
Take Profit Target: Around $3200–$3185
Stop Loss: Above $3260

Bullish Scenario (Short-term Rebound Play)
Entry: Enter a short-term long after confirming a rebound near $3230
Take Profit Target: $3255–$3260
Stop Loss: Below $3220

Conclusion:

XAU/USD appears to be in the final phase of a technically "directionless range market," approaching the timing for the next trend formation. Based on the positioning of the moving averages, ADX/DMI structures, and changes in volume, signs of renewed bearish bias are becoming apparent. In particular, the $3230 level is shaping up to be a key inflection point for future trend direction.

Traders should prepare for a potential volatility breakout and consider flexible strategies such as breakout trading, sell-the-rally, or buy-the-dip approaches depending on market movement.

Disclaimer:

This article is for informational purposes only and does not constitute a recommendation to buy or sell any specific financial instrument. Market conditions are constantly changing, and all trading decisions should be made at your own discretion and responsibility.
For more detailed analysis and updates on other currency pairs, please visit the official FIXIO blog.