Gold prices may remain range-bound for the next three to six months, as the Federal Reserve is unlikely to make any major policy changes before its September meeting.

According to Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, tensions involving Iran have created significant volatility in energy prices and inflation expectations. In this environment, the Fed is likely to avoid adding further uncertainty to financial markets during the summer.

Gold Is Caught Between Two Opposing Forces

Gold previously surged to around $5,500 per ounce before correcting toward the $4,000 level.

Geopolitical risks continue to support safe-haven demand. However, if oil prices rise again and inflation accelerates over the coming months, a stronger U.S. dollar and expectations of higher interest rates could weigh on gold.

This leaves the short-term outlook for the precious metal relatively balanced, without a clear bullish or bearish trend.

The Fed May Delay Any Major Decision Until September

Cieszynski believes the Fed needs more time to determine whether the decline in June inflation was the beginning of a lasting trend or merely a temporary development.

As a result, the September meeting could become more important for the monetary-policy outlook. The upcoming interest-rate decision may not generate significant market volatility unless the Fed delivers an unexpected signal.

Gold Could Remain Range-Bound

In the near term, gold is expected to trade between $3,960 and $4,170 per ounce.

Following a strong rally and a deep correction, the market may need more time to stabilize. This consolidation phase could last between three and six months, or possibly longer if the Fed maintains a cautious policy stance.

Conclusion

Gold currently lacks a strong enough catalyst to establish a clear new trend.

Geopolitical risks continue to support prices, while inflation concerns, a strong U.S. dollar and elevated interest rates limit the potential for a breakout. The $3,960 to $4,170 per ounce range may therefore remain important in the months ahead.

Source: Kitco