Gold hits the nine-week mark, can it make 10?

(Kitco News) - Last week, we warned investors that a degree of caution was warranted — and that advice still holds, even as the gold market looks to end the week with a 5% gain.

Despite its weekly advance, the yellow metal is poised to end Friday with a 2% loss. Gold is seeing its biggest one-day drop since May, when prices were trading between $3,200 and $3,400 due to President Donald Trump’s trade-tariff-induced volatility.

The cap in gold’s rally comes as it closes its ninth consecutive week in positive territory — something that has only happened five times since the 1970s. The last nine-week rally occurred from June to August 2020.

The gold market has never seen 10 consecutive weeks of gains.

As we contemplate what could happen to gold in the coming weeks, I thought now might be a good time to take a quick stroll down memory lane.

Five years ago, gold prices made their initial break above $2,000 an ounce. After peaking in early August, the market entered a solid downtrend. Prices initially bottomed out in early March 2021 at $1,677; after further consolidation, prices tested support just above $1,600 in late October 2022.

Of course, as they say, “the rest is history.” By November 2022, gold found its footing and embarked on what has been a historic three-year rally.

At the same time, a lot has changed in the last five years, which is why nobody is calling an end to gold’s rally anytime soon — even if we could see a short-term consolidation period.

This past week, banks including Société Générale, Bank of America, and HSBC raised their 2026 forecasts, projecting that gold prices could hit $5,000 within the first half of the year. JPMorgan CEO Jamie Dimon said that in the current environment, gold could easily reach $5,000 or even $10,000 an ounce.

As we’ve mentioned several times during this three-year rally, gold prices may be overbought on a technical basis, but they remain supported by strong fundamentals. Global debt is expected to continue climbing, which will push inflation higher and economic growth lower. At the same time, faith in the U.S. dollar continues to erode, and gold remains the only other liquid monetary asset in the marketplace.

Meanwhile, new risks are emerging. Slowing economic growth is weighing on the banking sector as companies struggle to repay loans. Some analysts warn that the U.S. may once again be on the brink of a regional banking crisis. Meanwhile, Congress’s inability to pass new funding legislation is beginning to take its toll on the economy. There are even expectations that this shutdown could surpass the 35-day record set in 2018.

There is no shortage of fear and uncertainty in the global economy, and gold appears to have become the lifeline people are reaching for. However, it’s also important to recognize that higher prices can become targets for profit-taking, which could weigh on price action.

If the past is any guide though, any corrections are still expected to be short and shallow.

That’s it for this week. Have a great weekend.