The price of gold has been a focal point of interest for investors as numerous financial institutions anticipate a surge that could see it hitting the $3,000 mark per ounceHowever, there are indications from the market suggesting that this upward trend might require a breather sooner rather than later.

Recent developments have accentuated the volatility in gold pricesFollowing the U.S. government's announcement of a 25% tariff on all steel and aluminum imports, gold experienced a turbulent trading sessionInitially, it reached a notable high of over $2,942 an ounce before retracting most of its gains throughout the trading hoursThis year, gold has already marked its eighth record peak, reflecting an astounding 27% increase over 2024 and an additional nearly 11% rise thus far this year.

The latest taxes announced to go into effect in March are touted by the administration as means to bolster domestic production and create more job opportunities for AmericansHowever, concerns have been raised regarding the potential for even higher tariffs in the future.

These disruptive actions by the U.S. in the international trade arena have fortified gold's reputation as a safe haven asset during uncertain timesTraders are also grappling with the implications of these policies on U.S. economic performance and monetary policy, especially if the administration's strategies rekindle inflation while stunting growth.

Attention will keenly be directed towards Federal Reserve Chairman Jerome Powell's testimonies in Congress on the upcoming Tuesday and Wednesday for insights into potential shifts in monetary policySince the beginning of 2023, short-term inflation expectations in the U.S. have risen to their highest levels, surpassing those of long-term expectationsSuch data could lend credence to arguments for a gradual run-down of easing measures which may potentially hurt the allure of non-yielding gold.

As gold prices surge, there has been a noteworthy influx of investments into physically-backed gold exchange-traded funds (ETFs). Data compiled by Bloomberg indicates a consistent rise in global gold ETF holdings over the past seven weeks, marking this the highest accumulation since November of the previous year.

Investment banks have forecasted a new test of the $3,000 per ounce threshold for gold

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Citigroup noted last week that they expect to see gold hit that figure within the upcoming quarter, largely attributable to geopolitical tensions heightening demand for the metalMeanwhile, Yuxuan Tang, a global market strategist at JPMorgan Private Bank, has set an end-of-year target price for gold at $3,150 per ounce.

Independent analyst Ross Norman articulated, “Gold is unequivocally aiming for the $3,000 level, and the market is showing incredible strength, almost relentless in its advanceThe only question now is not whether it will extend these gains, but when.” Expectations had initially suggested that profit-taking might trigger a reversal in gold prices; however, the reality has proven otherwise, signaling robust underlying momentum.

Joseph Cavatoni, senior market strategist at the World Gold Council (WGC), elaborated on the uncertainty surrounding U.S. trade and economic policyHe noted, “This creates an environment ripe for heightened volatility in gold pricesWhile we may witness gold prices reaching $3,000, we foresee prolonged fluctuations that could pull prices back below that level.”

Certain market indicators also raise concerns that the rapid ascent of gold prices may be overextended, implying that a pause in the upward trajectory could be in orderThe 14-day Relative Strength Index (RSI), which measures the speed and change of price movements, recently approached 80, considerably above the 70 threshold that many analysts consider indicative of an overbought condition.

The proposed tariff measures are widely perceived as a catalyst for rising inflation rates, consequently amplifying demand for safe-haven assets like gold, which are traditionally viewed as hedges against inflation and geopolitical uncertainty.

Concerns regarding the tariff initiatives are reflected in the COMEX gold futures market, where the trading price of major contracts is notably above spot prices, currently showing a premium of around $28.

Sources have indicated that following a spike in gold deliveries to the U.S., participants in the London bullion market are racing to borrow gold from the Bank of England. "The spot price of gold in the Bank of England’s vaults is below the market level

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