Gold: heading toward the $3K?

The sixth straight week of gains is behind the price of gold. Tariffs, uncertainty, geopolitics all bring uncertainty to investors, pushing the price of gold to higher grounds. The current uncertainty regarding trade tariffs which are or will be imposed on the US trading counterparts, especially China, is one big concern for market participants. As per currently available news on this topic, for the moment, tariffs on goods from Canada and Mexico will be delayed for one month. What will happen after, markets do not have a clue. As long as this topic is relevant, the price of gold might head further to the upside. Some analysts are currently predicting that the price of gold might reach the level of 3K in coming months. At the same time, news is coming from China, that the country will allow its insurance companies to hold gold as a long-term asset allocation. This implies further demand for the gold, supporting the potential for a 3K target.

During the week, the RSI reached the level of 74, implying a strongly overbought market side. Under normal market conditions, this would be an indication of a potential for a short term price reversal, however, as long as uncertainty holds, the indicator might continue to move within this territory. The moving average of 50 days is still strongly diverging from MA200, without any kind of indication of a potential cross in the near term period.

Technical analysis is suggesting also that the price of gold is headed toward the higher grounds. However, on this road, there might be some short reversal. The major historical support currently stands at $2.780. In case of a short reversal, this would be a point to watch. On the upside, the next target of gold could easily be 3K, if the line of price tops is followed from April 2024 and October 2024. This is all a longer-term picture of gold charts. For the week ahead, there is a possibility of a short reversal, however, the much higher probability lies with an uptrend.