We hate to say it, but gold is a commodity, though not quite like any other — say, soybeans. But as a commodity, it is still subject to market forces. In other words, price fluctuations.
Indeed, gold was up for eight trading sessions through March 20, surging above $3,000 per troy ounce for the first time on March 14.
But when Friday trading opened, the price of the yellow metal fell. From Thursday’s record close of $3,043.80 a troy ounce, gold settled down $22.40 to $3,021.40.
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Gold became relatively expensive
Does this mean gold is about to crash? A simple explanation about what happened this week came from Peter Grant, a vice president at Zaner Precious Metals in Chicago. It was just plain profit-taking, he told Reuters.
Gold fell to as low as $3,004.10 per ounce on Friday, but it was still up nearly 0.7% for the week. That suggests some investors are prepared to defend the $3,000 level, achieved for the first time only on March 14. For the year, gold has climbed about 14%.
At above $3,000 an ounce, however, gold had become very expensive on a relative basis and was ready to tip at least a little. You can say that for this reason:
As the eight-day winning street ebbed, the daily gains began to shrink. Gold had risen as much as $44.50 an ounce on March 13. The gains were just 40 cents on March 19 and $2.60 on March 20.
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Its relative strength index, which looks at how big a price is changing over a specified period, was 75 in mid-February when gold was selling for $2,569.46 an ounce. The price dipped modestly, along with stock prices, at the end of February.
Then gold jumped again, this time nearly 7% over those eight trading sessions.
Its RSI also moved above 70.5. But gold again was overbought, and some gold enthusiasts started to take some money off the table — at least for now.
A reading of 70 warns that something is vulnerable to a price break. Above 75 is a very worrisome level. Above 80 says the price is about to break.
A reading under 30 says the stock or commodity is oversold. At 20 or lower, a price rebound is about to hit.
A crucible of gold is removed from the furnace at the ABC Refinery smelter in Sydney, Australia.
What happens to gold next? It’s complicated
So, what happens next is potentially complicated.
Many investors prize gold as a safe haven — maybe even the safe haven — in times of economic stress. And there’s been plenty of stuff happening to create volatility in just the first two months of 2025:
Stresses created by the Trump Administration’s campaigns to raise tariffs and slash the federal government’s payrolls to trim US. deficits. Economic uncertainty in Europe. Increasing tensions in the Middle East and between the United States and China in Asia.
In theory, that should provide fuel to push gold higher. Macquarie Group, the big Australian investment house, has a price target of $3,500 an ounce. BNP Paribas sees gold holding at $3,000.
After that, there’s wishful thinking in the guise of targets set by gold miners. Rob McEwen, CEO of McEwen Mining (MUX) of Toronto, sees gold hitting $5,000, although he isn’t sure when. On the other hand, gold’s big gains since Covid-19 pandemic were a surprise.
But gold is still a commodity. It’s possible metal could fall a bit more in the next few months.
Gold’s swings are usually short, however — maybe a couple of months. But occasionally a downward swing can last some time. Gold peaked at about $1,818 an ounce in summer 2011 and didn’t bottom until the end of 2015 at $1,067.
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Meanwhile, on March 21 the SPDR Gold Shares ETC (GLD) , which buys gold directly, was off 0.8% at $278.49. The iShares Gold Trust ETF IAU, which also invests in bullion, also was down 0.8%, at $56.97.
Stocks were all over the place on March 21, with the Dow Jones Industrial Average slumping as many as 519 points soon after the open. Investors bought as the day progressed, putting the Dow in the green at 41,955 at 1:50 p.m. ET. The blue-chip benchmark gave up the gains, then struggled back to finish a tick above flat at 41985.35.
The Materials sector was weak. Stocks in the index include metals and gold producers Newmont (NEM) , which slipped 0.8% to $47.36 and Freeport-McMoRan (FCX) , down 1.1% at $40.25.
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