Key Takeaways
- Gold will remain in the spotlight for the start of the week, after it set a new record on Friday when it crossed the closely-watched $3,000/oz threshold for the first time.
- 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.
- Bars pattern analysis, a technique that overlays price bars from the asset’s uptrend between August and October last year on top of the breakout point last Thursday, predicts a target upwards of $3,365.
- Investors should watch crucial support levels on gold's chart near $2,833, $2,790, and $2,721.
Gold (XAUUSD), after setting a record high above the closely-watched $3,000/oz, will remain in the spotlight as we begin the week.
The precious metal gained a boost in the last week when investors began flocking to the safe haven asset amid fears that Trump administration’s unpredictable policies on tariffs could slow down economic growth and increase inflation.
Gold has risen 14% in the last year, as of Friday. 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 look at the gold chart and use technical analysis to highlight important price levels that investors might be watching.
Pennant Pattern Breakout
Gold has been consolidating within a two week pennant pattern before breaking above the top trendline. This indicates that the commodity’s long-term uptrend will continue.
Moreover the relative strength index (RSI), with a value above 50, confirms bullish momentum in the price. However, a move this week into the overbought zone could increase the likelihood that near-term profits will be taken.
Let’s look at the gold chart and see how we can forecast a potential continuation. We will also identify several important support levels to monitor during possible pullbacks.
Bars Pattern Analysis
Investors can use the bars pattern analysis to predict how a future move higher will look. This technique uses previous trends to make price projections.
We overlay the price bars from the breakout point of last Thursday on the chart to get the analysis for gold. This forecasts a target price of $3,365 per ounce, or 13% higher than Friday’s closing.
The prior trending movement, which began after a breakout from a pennant pattern earlier on the chart, played over 57 days of trading, indicating that a move higher could last as long as early June if price action is in sync.
Monitor the Support Levels Crucial
Gold’s initial price may return to $2,833 due to profit-taking. This area may provide support near pennant’s lower trendline, and the upward-sloping moving average of 50 days.
The next level to watch is around $2,790. Investors seeking entry points near yellow metal’s prominent swing high in late October could respond to a pullback at this location with buying interest.
A deeper retracement may lead to a new test of the lower support level at $2,721 if it is sustained. This region, located about 9% below Friday’s close, could attract bids near the two closely aligned peaks on the chart that formed in November and December of last year.
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As of the date the article was written, author does not own any above securities.
