Gold: a profit-taking?The price of gold marked its seventh consecutive week of gains, reaching its new historically highest level at $2.940. A reach closer toward the $3K mark implied some profit-taking from investors at Friday's trading session, when the price of gold reverted back by 1%, ending the week at the level of $2.883. Regardless of this pull back, analysts are pointing that there are still supporting factors which could further support the price of gold at higher grounds, which includes: US trading tariffs, US inflation figures and weakening of the US Dollar.
With a drop in the price of gold on Friday, the RSI moved from the strongly overbought territory toward the level of 65. This move still does not provide a clear guidance whether the market is entering the reversal path. The MA50 continues to diverge from MA200, without any indication that the convergence might start anytime soon.
As long as geopolitical and tariffs risks are active, the investors sentiment might easily be changed, bringing higher volatility to the price of gold. The Fridays’ reversal might be only temporary. Charts are still pointing toward the $3K mark, which is a long term resistance line, if we take into account peak prices from April 2024 and October 2024. In this sense, it could be assumed that the market will try to reach this level in the near short period. In case that the potential is exhausted, the market will finally revert toward the downside. From the perspective of technical analysis, the week ahead should provide some main clues, whether a reversal is ready to start, or whether Friday trading session was only a profit-taking day.
