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.
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: