Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Gold is on the verge of a breakout following a short period of muted trading as markets enter a risk-off environment. StoneX technical analysts point to a tightening consolidation triangle, indicating a sharp uptick in buying pressure. This bullish chart pattern is developing as global trade relations remain fraught and uncertain despite minor improvements in US-China relations.
Within the gold market, physical inventories are stabilizing, ETF demand is sending mixed messages, and Eastern inflows are rising. The combination of a technical setup and geopolitical deterioration suggests an incoming rebound to the upside.
A Consolidation Triangle
After hitting a record-high of $3,500, gold prices took a quick breather as markets weighed the impact of crucial tariff developments and potential rate cuts. With no significant economic improvements, investors remain optimistic. The result has been a steady recovery in gold prices, approaching new highs. This movement is represented on technical charts as a triangle. As StoneX analysts explain:
“Gold continues to consolidate but is close to completing a triangle formation, which implies a reasonably imminent breakout.”
Tariff Uncertainty Persists
Trump’s tariff scheme remains a destabilizing force in the world economy, keeping investors on edge and boosting the appeal of safe-haven assets.
Last week, the White House celebrated a so-called trade deal with China, although taxes on Chinese imports remain at a staggering 55%. For its part, the CCP was cautiously optimistic about the progress in trade talks but stressed only a “framework” had been achieved, leaving the details unclear.
At the same time, the legality of Trump’s sweeping unilateral tariff decision remains in question, a decision that could topple the administration’s favorite piece of economic leverage. The steel and aluminum tariffs, which the president recently doubled to 50%, are likely to remain unharmed because they fall under a different authority.
“All of this remains supportive for gold,” explains Rhona O’Connell, StoneX’s Head of Market Analysis. The admin’s constant flip-flopping and the questions over the constitutionality turn investors away from speculative growth markets and toward stable assets. “Markets moving into risk-off, with equities under pressure.”
Key Gold Market Developments
Politics is the determining factor in gold’s direction, O’Connell predicts. Yet, several developments in the gold market are worth watching, too.
COMEX Inventories Stabilize
Earlier this year, COMEX inventories experienced a sharp influx of physical gold as investors were onshoring investments to beat potential precious metal tariffs.
Over the past few months, stockpiles have started to decline and now seem to be stabilizing at lower levels. This is indicative of a steady demand and a tight supply.
Mixed ETF Demand
Gold exchange-traded funds (ETFs) saw a stark rise in demand at the beginning of the year, but higher prices eventually hampered retail demand.
May broke a five-month streak of positive inflows with global outflows totaling $1.8 billion. On a positive note, European demand flipped green, reaching $225 million worth of inflows.
Eastern Demand Continues
Although ETF demand dipped into negative territory, Eastern central bank consumption remains robust. China topped up its reserves for the seventh consecutive month in May, building on strong purchases in Q1.
Gold’s Bright Outlook
Despite some mixed conditions specific to the gold market, StoneX’s short-term outlook on gold stands strong:
“Gold is still consolidating, but the tone is hinting at fresh gains.”
O’Connell has set a price prediction of $3,500 in 2025 as economic uncertainty and macroeconomic turmoil mount.
The long run is even more optimistic with a growing consensus of experts calling for $5,000 gold.