Xauusd price forecast may 2025 hedge ratios in portfolio allocation

Hedge ratios in portfolio allocation studies suggest increasing gold weighting in May 2025 could reduce volatility, consistent with a favorable "XAUUSD price forecast May 2025". While the relative strength index moves toward overbought levels to signal strong price momentum, the indicator remains below 75, a reading that has coincided with minor retracements in the commodity after strong trending periods. The Federal Reserve’s 25-basis-point rate cut to 4.00%–4.25% has reinforced the bullish case for gold. Although Chair Powell signaled caution, his emphasis on “risk management” suggests more flexibility, particularly with inflation still above target and labor market data softening. Futures markets now price in two additional cuts by year-end. Minneapolis Fed President Kashkari added to dovish expectations by stating that more cuts are likely. The gold-to-silver ratio remains elevated above historical norms, often signaling stronger moves in gold, bolstering "XAUUSD price forecast May 2025" bullish cases.