(Kitco News) - The gold market remains stuck in a solid consolidation pattern, and while one investment firm has taken some profits off the table, it still expects the precious metal to remain well-supported through year-end.
In a recent interview with Kitco News, Tom Bruce, Macro Investment Strategist at Tanglewood Total Wealth Management, said he recently used gold’s sideways trading as an opportunity to reduce his exposure to the precious metal, decreasing his portfolio weighting to 10% from 12%.
However, he added that the selling was only a function of portfolio rebalancing, noting that the firm’s 10% holdings in gold represent its maximum position. Tanglewood was overweight gold in the first half of the year due to its nearly 30% rally so far in 2025.
“I think gold can continue to go sideways for a while, but we still remain bullish long term,” he said.
Bruce explained that it made sense to take some profits as easing geopolitical tensions could keep gold prices range-bound. Recent trade deals the U.S. government has made with Europe and Japan have removed some anxiety from the marketplace.
“The trade agreements, while not great, will provide some clarity for investors,” he said. “That clarity will be a negative for gold.”
Under the agreements, tariffs on imports from Europe and Japan will increase by 15%. While there is some clarity over trade, Bruce said there are still questions about how higher prices due to tariffs will impact inflation expectations and economic activity.
Although tariffs threaten to push inflation higher, Bruce said he doesn’t expect them to stop the Federal Reserve from cutting interest rates in September. However, he cautioned that anyone looking for aggressive cuts this year should adjust their expectations.
Economic data this week show that inflation remains stubbornly elevated. The Core Consumer Price Index, which strips out volatile food and energy costs, rose 3.1% in the 12 months to July.
Bruce said he expects a weak housing sector to bring down housing and rent prices, which have been major contributors to inflation in recent months.
“The shelter cost side of things is probably going to bring the overall inflation number down, even if goods numbers go up a little bit,” he said. “But there is a limit. I think you could make a case for cutting 1% in a relatively short order without there being any major issues. But beyond that, it's going to be problematic.”
While the new easing cycle should continue to support gold above $3,300 an ounce, Bruce said there is another factor keeping him bullish on the precious metal. He explained that the U.S. government continues to have a spending problem as the deficit remains on an unsustainable path. At the same time, declining global faith in the U.S. dollar as a reserve currency is causing some weakness in its purchasing power.
“The competition we are seeing against the U.S. dollar is from gold,” he said. “I'm still bullish on gold, but it may just stay in the trading range. Looking more towards next year, I think the driver, going forward, will probably be a weak dollar.”
