The Commodity Futures Trading Commission says the rise of gold above $2,000 was mainly driven by short covering. However, as the world faces a major banking crisis similar to that of 2008, the growing interest in safe-haven assets could create a sustained bullish momentum.

The latest data from the CFTC came almost a month after reporting was disrupted because of a ransomware attack on ION Trading UK. With the trade data back on track, commodity analysts said there is upside potential in gold as financial managers increased their speculative long positions by 6,530 contracts to 124,090, while short positions fell by 14,978 contracts to 43,861. Currently, there are 81,229 contracts in the gold market, which is 36% more than the previous week. It is also the highest level in a month.

John Reade, chief market strategist at the World Gold Council, said it is likely that the short-squeeze in gold has run its course.

"Gold futures positions are now around the lowest levels seen in the past two years, while long positions are less extended," Reade said. "So, although there is room to add on the long side, there's probably limited room for further short covering from Money Managers," he added.

Commodity analysts at TD Securities also noted that gold showed solid gains in the last couple of weeks. However, the trend will depend on the monetary policy of the Federal Reserve.

Nevertheless, the uncertainty in the banking sector is driving gold higher, which means that the precious metal could hit $2,000 by the end of 2023.

Powell's outlook is also at odds with market expectations, as the latter expect a rate cut in June and four rate cuts before the end of this year. According to the Fed chief's statements, it is unlikely that the central bank will continue to raise interest rates except in May as the world is in the early stages of a banking crisis. The Fed does not intend to lower rates either.