After rising above $5,500 per ounce in January and falling below $4,000 per ounce by late June, gold has experienced one of its most volatile periods in years.

According to the World Gold Council, current gold prices broadly reflect a global environment of moderate economic growth, cooling but still elevated inflation, and expectations that central banks will continue tightening policy only to a limited extent.

Under the base-case scenario, gold may trade within a range of approximately ±5%.

However, prices could return to $4,500 per ounce or higher if economic conditions deteriorate, geopolitical tensions intensify, interest-rate expectations shift lower, or strong dip-buying demand returns.

Conversely, resilient economic growth, higher bond yields and calmer market sentiment could place further pressure on gold. Even so, a decline of more than 10% from current levels may be limited by bargain-hunting demand.

Continued central bank purchases and policy changes in major markets such as India will also be important factors to watch during the second half of the year.

Conclusion

Gold may remain range-bound in the short term, but the market is still highly sensitive. A sufficiently strong catalyst could quickly trigger a breakout from the current trading range.

Source: WGC