Gold prices soared to all-time highs and the elusive $2,000-per-ounce level during Monday's session. However, the sharp move over the past five sessions has led to overbought technical conditions.

As governments and central banks ramp up spending to combat the COVID-19 pandemic, gold has significantly outperformed all other major asset classes. Many investors turn to gold as a hedge against the long-term risk of inflation that comes from increased spending and monetary easing. The U.S. dollar's weakness versus the euro has also contributed to gold's move higher, since precious metals are denominated in U.S. dollars in the global financial markets.

The SPDR Gold Trust ETF (GLD) rose more than 2% alongside other gold-focused exchange-traded funds (ETFs) and miners. With the sharp rise in gold prices, leveraged ETFs and exchange-traded notes (ETNs) were among the biggest winners, including the VelocityShares 3X Long Gold ETN (UGLD).

Analysts have been bullish on gold prices throughout the COVID-19 pandemic. Deutsche Bank's Chief Credit Strategist Jim Reid said that fiat money will be a passing fad in the long-term history of money, while Citi analysts predicted that gold would hit $2,000 per ounce over the next three to five months – although that level appears within sights this week based on current momentum.

Chart showing the share price performance of the SPDR Gold Trust ETF (GLD)

From a technical standpoint, the SPDR Gold Trust ETF broke out to all-time highs of $182.69 during Monday's session. The relative strength index (RSI) rose further into overbought territory with a reading of 84.5, but the moving average convergence divergence (MACD) extended its bullish uptrend. These indicators suggest that prices could see some consolidation in the near term before resuming the long-term trend higher driven by ongoing uncertainty and inflation concerns.

Traders should watch for consolidation above trendline support at around $170.00 over the coming sessions. If the index extends its move higher, traders could see a move toward fresh all-time highs. If the index breaks down from support levels, traders could see a move toward the 200-day moving average at $152.16, although that scenario appears less likely to occur given the bullish fundamental backdrop.

The author holds no position in the stock(s) mentioned except through passively managed index funds.