(Kitco News) – Gold prices continue to tread water around $3,300 an ounce, buoyed by broader investor optimism and a one-month delay in U.S. import tariffs. Although shifting investor sentiment could continue to weigh on gold, one research firm expects prices to remain well supported through the rest of the year.
In their latest note, commodity analysts at Metals Focus said they see limited downside for gold in the second half of the year as ongoing economic uncertainty is expected to support investment demand.
“Although the global economy appears to have avoided a full-scale trade war, U.S. tariffs are expected to remain historically high for some time. Perhaps more significantly, while the U.S. economy has remained resilient thus far, the inflationary impact of tariffs may take several months to fully resonate with consumers. The risk of stagnation is therefore likely to persist,” the analysts said in the report.
Spot gold last traded at $3,315.76 an ounce, roughly unchanged on the day.
The British precious metals research firm added that concerns about unsustainable global debt are another factor likely to support gold’s long-term uptrend. Specifically, investors are keeping a close eye on U.S. government debt, which has now surpassed $37 trillion.
At the same time, new budget legislation is expected to increase the deficit by nearly $4 trillion over the next 10 years. Fears over the size of the U.S. government’s debt have kept long-term bond yields elevated and pushed the U.S. dollar to multi-year lows.
“President Trump’s tax-and-spending bill is projected to widen the deficit, keeping bond supply concerns in focus. Investor confidence in the independence of the U.S. central bank will also remain a key issue. While the dollar’s role as the primary reserve currency is not under immediate threat, longer-term concerns about its stability continue to support gold,” they said.
Some analysts have noted that gold could struggle in the second half of the year as bullish positioning has become overcrowded. However, Metals Focus noted that positioning in July has eased.
“At the start of July, net managed money long positions in CME futures returned to levels last seen in April, though they remain well below the highs recorded earlier in the year,” the analysts said. “Similarly, after modest outflows in May, gold exchange-traded products (ETPs) saw renewed inflows in June, with global holdings by the end of June rising to their highest level since August 2022. Measured in U.S. dollar terms, gold ETPs reached a new all-time high end-month value of $383 billion.”
