Is this a sign of a major gold plunge?! XAU/USD near breaking below $3270, signals of a renewed selling trend!

XAU/USD Analysis – Gold Battles at $3275, Bearish Rebound Trend May Prevail

Overview (May 12, 2025)

Gold (XAU/USD) is currently trading near $3275, with a key battle unfolding around the important support level at $3270. Price action in recent hours shows a heavy resistance above, indicating a bearish market where selling on rebounds is dominant. Multiple technical indicators, including moving averages on the 1-hour chart, ADX and DMI signals, and volume trends, are flashing bearish signals, suggesting the potential for another downward phase.

Key Point 1: Bearish Structure Signaled by Moving Averages

On the XAU/USD chart, the 50-hour moving average (blue line) has already crossed below the 200-hour moving average (red line), forming a “death cross.” This is generally viewed as a medium-term bearish sign, and prices are currently trading below both moving averages.

Notably, even when prices attempt to rebound, they are being capped at the 50MA, confirming its role as resistance. This behavior suggests that sellers dominate market sentiment, and no trend reversal has been confirmed. As such, short-term rebounds are likely to remain limited, and a sell strategy appears favorable.

Key Point 2: ADX and DMI Indicate Strengthening Bearish Trend

The ADX (Average Directional Index), which measures trend strength, is currently on a gradual rise and sits around 0.15–0.17. Typically, a reading above 0.20 is seen as confirmation of a strong trend, so the market is in a pre-trend stage.

Meanwhile, in the DMI (Directional Movement Index), the -DI (red line) has once again crossed above the +DI (green line), signaling growing bearish momentum. This indicates that a clearly defined downtrend may be approaching. If ADX rises above 0.20, it may reinforce trend-following sell strategies.

Key Point 3: Rising Volume Correlates with Bearish Pressure

Volume trends also deserve attention. During the decline near $3275, volume temporarily spiked, indicating an increase in both speculative and fundamental selling. Price drops with high volume are often seen as “high-confidence bearish signals,” suggesting more than short-term positioning—possibly medium-term selling pressure.

Particularly, if the price breaks clearly below $3270 and volume rises again, an accelerated selloff may occur, with downside targets around $3240–$3220 in focus.

※Image source: cTrader platform

Outlook and Trading Strategy

With the current price zone under pressure, the following technical elements may influence the next move in XAU/USD:

• Can $3270 support hold?: A break below this level could trigger further declines toward $3240, then $3220.
• Sell zone around $3300–$3310: Even if a short-term rebound occurs, as long as price remains capped here, bearish sentiment remains dominant.
• ADX trend: If ADX exceeds 0.20, it confirms trend momentum and could reinforce bearish continuation.

Trade Scenario Examples

Bearish Scenario (Sell Bias)
Entry: Short on clear break below $3270
Take Profit: $3240–$3220 (consider partial exits based on market context)
Stop Loss: Above $3305–$3310

Short-Term Rebound Scenario (Countertrend)
Entry: Long if bullish candlestick patterns or wicks appear near $3270
Take Profit: $3300–$3305
Stop Loss: Exit if price falls below $3260

Conclusion:

With multiple technical indicators flashing bearish signals, XAU/USD remains in a tug-of-war at the critical $3270 support. Resistance from moving averages, potential trend formation from ADX and DMI, and rising volume collectively point toward a bearish bias.

A sell-on-rebound strategy remains preferable, but any countertrend attempts should involve clear risk-reward setups. Pay close attention to ADX behavior to identify trend acceleration or reversal timing.

Disclaimer:

This article is for informational purposes only and does not constitute investment advice. All trading decisions should be made at your own discretion and responsibility.
For more analyses on other currency pairs and the latest market news, visit the FIXIO Blog.