Key Takeaways
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Gold is set to remain in the spotlight to start the week after setting a new record high on Friday, when the precious metal crossed the closely watched $3,000/oz level for the first time.
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The commodity consolidated within a two-week pennant before breaking out above the pattern’s top trendline last Thursday, signaling a continuation of the yellow metal's longer-term uptrend.
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Bars pattern analysis, which takes the price bars comprising the asset’s uptrend from August to October last year and overlays them from last Thursday’s breakout point, forecasts an upside target of around $3,365.
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Investors should watch crucial support levels on gold's chart near $2,833, $2,790, and $2,721.
Gold (XAUUSD) is set to remain in the spotlight to start the week after setting a new record high Friday above the closely watched $3,000/oz level.
The precious metal received a boost last week as investors flocked to the safe-haven asset amid concerns that the Trump administration’s unpredictable tariff policies could slow economic growth and accelerate inflation.
Gold gained 2.6% last week and has jumped 14% since the start of the year as of Friday’s close. By comparison, the S&P 500 stock index has fallen about 8% from its record high set less than four weeks ago amid the political and economic uncertainty.
Below, we take a closer look at gold’s chart and apply technical analysis to point out crucial price levels that investors may be watching.
Pennant Pattern Breakout
Gold consolidated within a two-week pennant before breaking out above the pattern’s top trendline last Thursday, signaling a continuation of the commodity’s longer-term uptrend.
Moreover, the relative strength index (RSI) confirms bullish price momentum with a reading above 50, though a push this week into overbought territory could increase the likelihood of near-term profit-taking.
Let’s turn to gold’s chart to forecast how a continuation move may play out and also identify several crucial support levels worth monitoring during potential pullbacks.
Bars Pattern Analysis
To forecast how a continuation move higher in the commodity might look, investors can use bars pattern analysis, a technique that analyzes prior trends to make future price projections.
When applying the analysis to gold’s chart, we take the price bars comprising the asset’s uptrend from August to October last year and overlay them from last Thursday’s breakout point. This forecasts an upside target of around $3,365 an ounce, around 13% above Friday’s closing price.
The prior trending move, which commenced following a breakout from an earlier pennant pattern on the chart, played out over 57 trading days, indicating a similar move higher could last until early June this year if price action rhymes.