(Kitco News) - Although gold continues to struggle near $4,000, support is holding, and retail investors are showing little sign of capitulation, according to one market expert, who said the current selling reflects disciplined profit-taking rather than financial distress.
In an interview with Kitco News, Chris Gaffney, President of World Markets at EverBank, said that while his trading desk has recently seen more sellers than buyers, the shift does not reflect panic or a loss of confidence in gold's long-term outlook. Instead, investors who benefited from the metal's historic rally are simply locking in gains while waiting for a better opportunity to re-enter the market.
"We're not seeing the liquidity selling," Gaffney said. "We've seen liquidity selling in the past with the equity markets, where people sell the one asset that has held its value to offset losses elsewhere. We're not seeing that."
Instead, Gaffney said retail investors recognize they are sitting on substantial profits after gold's powerful advance and are choosing to step aside near an important technical inflection point.
"They understand the value," he said. "They're selling and waiting to see if they can come back in at a better price. It's not desperation, and it's not because they have to offset losses elsewhere."
For Gaffney, that distinction is critical because it suggests the precious metals market remains fundamentally healthy despite the recent correction.
"I think this sentiment is a sign of a healthy market," he said.
His comments come as gold wrestles with competing macroeconomic forces. On one hand, persistent geopolitical uncertainty and steady central bank purchases continue to provide long-term support. On the other, elevated interest rate expectations and the opportunity cost of holding a non-yielding asset have kept many retail buyers on the sidelines.
Gaffney said EverBank continues to see solid support from central banks even as individual investors have become net sellers.
"We've been seeing more sellers than buyers, which isn't surprising given the move in the market," he said. "They're taking profits. They're happy with where they are."
At the same time, he noted that investors are not rushing into gold-backed exchange-traded funds as a safe-haven trade because many still expect the current tensions in the Middle East to ease.
"I think, for the most part, individual investors are thinking this Middle East situation is going to get resolved," he said. "The longer it lasts, though, the more inflation becomes sticky."
Rather than chasing short-term price swings, Gaffney said many investors are waiting for greater clarity on Federal Reserve policy before committing fresh capital.
"I think a lot of buyers are saying, 'We're going to see cheaper prices, so why buy now?'" he said. "A lot of this sentiment is based on where the Fed goes next. If we see another rate hike, the opportunity cost could weigh on gold."
While higher interest rates may be limiting near-term demand, Gaffney emphasized that inflation concerns, geopolitical uncertainty and portfolio diversification remain compelling long-term reasons to own precious metals.
Despite the recent consolidation, Gaffney said he remains optimistic that retail investors have not abandoned gold. He pointed out that most commodity analysts expect prices to finish the year higher than current levels.
"I think we're in a good place still," he said. "If you add to your position at these prices, I think you'll be happy a year from now that you did."
