What's driving gold prices to record highs towards $3,000?
Gold has surged to a record $2,955 per troy ounce, outperforming major stock indices as central bank buying and geopolitical tensions fuel the rally.
Strong momentum in gold prices
Users of trading platforms have seen spot gold surge over 60% from October 2023 lows and by over 12% year-to-date, comfortably beating all US major stock indices.
Gold versus US stock indices year-to-date performance chart
The precious metal remains in a strong uptrend and is on track for its eight consecutive week of gains.
Central bank demand driving prices
Commodity trading participants should note continued strong buying from central banks, particularly China.
Global central banks have acquired more than 1,000 tonnes annually in recent years.
This institutional demand could support prices until they reach $3,000.00 per ounce.
The trend reflects efforts to diversify reserves away from the US dollar.
Fundamental support factors
Lower US Treasury yields have weakened the US dollar, supporting the current gold price rally.
Geopolitical tensions, including US tariff threats, enhance gold's safe-haven appeal, especially in view of inflationary pressures possibly rearing their head again.
Share dealing investors note divergence between ETF holdings and prices suggests potential increased buying.
Physical demand from India and China continues to influence price direction positively.
Risk factors to consider
A stronger US dollar could challenge gold's upward momentum.
Successful Ukraine-Russia peace talks might cause temporary weakness.
Interest rate decisions from major central banks remain crucial for price direction.
Technical outlook and price targets
The psychological $3,000.00 level represents a significant target for online trading participants.
This aligns with the 261.8% Fibonacci extension of the September 2022-to-May 2023 advance, projected higher from the October 2023 low, at $2,995.85.
Spot gold daily weekly chart
The strong medium-term uptrend will remain valid while prices stay above the mid-February $2,864.00 per troy ounce low on a weekly chart closing basis with the psychological $3,000.00 mark remaining in sight.
In an extended bull market scenario, the $4,000.00 region may also be reached longer-term target.
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