Gold Is Shaping a Top

Gold prices have surged by 1.3% this week to $3,125 per troy ounce, continuing their relentless climb to new all-time highs. Over the past 16 trading days, gold has set 10 record highs, with the latest peak reaching $3,167 per ounce early Thursday. This spike falls within the extreme target zone of $3,150–$3,250, suggesting a heightened risk of a downside reversal from a technical standpoint. Traders should brace for potential surprises.

The primary driver behind gold's rally has been U.S. President Donald Trump's aggressive tariff policies. Following last week's surprise 25% tariff on cars and parts, gold broke above resistance at $3,050–$3,080. Now, Trump has announced reciprocal tariffs on all U.S. trading partners, implementing a baseline 10% levy, which has been labeled a global trade war. However, his stance remains clear—once tariffs on American goods are lifted, the U.S. will remove its reciprocal tariffs, effectively enforcing a level playing field based on production cost efficiency.

Despite the potential for further retaliatory actions from other nations, there are signs that this trade war may be peaking. Even with the current tariffs in place, global economic growth is already under pressure in 2025. Any further escalation could push the world economy into crisis by 2026, making trade negotiations the more likely outcome. Some countries, like Israel, are already planning to eliminate tariffs on U.S. imports in hopes of easing newly imposed 17% duties on Israeli exports to the U.S. While tensions remain high with China and the European Union, these nations typically take pragmatic approaches, increasing the chances of a negotiated resolution. If trade tariffs are scaled back, it would be bearish for gold prices.

Large investors appear cautious in this late-stage rally. The SPDR Gold Trust (GLD) reported net inflows of $142.08 million last week but saw $59.49 million in outflows this week, indicating mixed sentiment and relatively low price volatility. This suggests the current rally may be fragile.

Adding to concerns about a market top, U.S. investment banks have sharply revised their gold price targets to $3,500–$4,000 per ounce. However, they also highlight that each $1,000 increase in price has come at an accelerating pace—an unsustainable trajectory. While such linear projections work in the middle of an uptrend, they are less reliable near a peak.

Traders may want to consider profit-taking strategies as gold approaches $3,150–$3,250. A key resistance level at $3,130–$3,150 must be breached to confirm further upside. The upcoming U.S. labor market report on Friday could provide a catalyst for price movement, but even if gold gains momentum, it is likely marking the formation of a top rather than the beginning of another extended rally.