Market Overview

Gold prices are still holding on to solid gains after testing the key support zone around USD 4,000 per ounce. However, according to some market strategists, the precious metal remains trapped in a broad consolidation phase as investors wait for clearer signals on interest rates and inflation.

In an interview with Kitco News, Tom Bruce, Macro Investment Strategist at Tanglewood Total Wealth Management, said he remains relatively neutral on gold in the short term. However, the longer-term outlook for the precious metal is still considered constructive.

Why Is Gold Losing Momentum?

According to Bruce, gold’s strong rally to record highs earlier this year was driven by two main factors: aggressive central bank buying and speculative capital flows. Many countries increased their gold purchases to diversify their reserves and reduce dependence on U.S. dollar-denominated assets.

However, this momentum has weakened recently as investor capital has shifted toward stronger growth sectors, particularly artificial intelligence and semiconductor stocks.

As safe-haven demand becomes less prominent, gold is once again being influenced more heavily by traditional drivers, especially real interest rates and expectations around the Federal Reserve’s monetary policy.

The USD 4,000/Ounce Zone Remains a Key Support Level

Although investor enthusiasm for gold has cooled, Bruce said there are no clear signs of widespread liquidation in gold positions. Instead, gold appears to be in a consolidation and positioning phase after its strong rally.

The fact that gold has managed to hold the support zone around USD 4,000 per ounce is considered an important signal. If gold clearly breaks below this level, the risk of a deeper decline could increase. On the other hand, as long as this support zone remains intact, the long-term bullish scenario has not been invalidated.

Long-Term Bullish Drivers Remain in Place

Although gold currently lacks strong short-term momentum, the longer-term supporting factors have not disappeared. Concerns over currency debasement, the possibility of lower real interest rates in the future, and especially the prospect of central banks resuming stronger gold purchases could continue to support prices.

According to Bruce, if central bank demand for gold accelerates again, this could be the fastest path for gold to return to record-high levels.

The Fed Remains the Key Focus

In the near term, gold may continue to trade within a narrow range as markets wait for the Federal Reserve’s next policy signal. Investors are still assessing the possibility that the Fed may maintain a tight monetary policy stance, while markets are also pricing in the chance of another rate hike later this year.

However, if the Fed signals that it may simply keep interest rates unchanged rather than raise them further, this could still be a positive factor for gold.

Conclusion

Gold is currently in a consolidation phase after holding the key support zone around USD 4,000 per ounce. In the short term, prices may continue to move sideways as investors wait for more signals from the Fed, inflation data, and real interest rate expectations.

However, the long-term bullish outlook for gold has not yet been broken. If central bank buying resumes and expectations for lower real interest rates become stronger, gold could still have room to recover and move back toward higher record levels.

📌 This content is for market perspective sharing only and does not constitute a buy or sell recommendation or investment advice.

Source: Reuters