Gold prices are showing signs of stabilization after a sharp retreat from record highs. Still, private-investor sentiment continues to weaken as uncertainty over US interest rates clouds the outlook for precious metals.
BullionVault’s Gold Investor Index, which measures the balance of buyers and sellers on the world-leading precious-metals marketplace, fell 1.9 points in July to 54.9. That was its lowest reading since November and only slightly above the index’s long-term average of 54.8. A reading of 50 would indicate an equal number of buyers and sellers. The index reached a post-pandemic high of 60.7 in March, highlighting how sharply enthusiasm has cooled since then. “While gold tends to thrive on uncertainty, it hates uncertainty over interest rates, and it’s really not enjoying the US Fed’s current confusion,” said Adrian Ash, BullionVault’s director of research. BullionVault, which looks after more than $7.8 billion in securely stored precious metals for over 130,000 users in 175 countries, reported that the number of investors buying gold fell 25.8% from June. Buyer numbers were the lowest since August last year.
Selling activity also declined, however, falling 22.7% to an 11-month low. That suggests the retreat in sentiment has not yet developed into a broad rush for the exits. By weight, BullionVault clients sold 75 kilograms more gold than they purchased during July. Their aggregate holdings consequently declined 0.2% to a three-month low of 43.5 tonnes. New interest in precious metals also weakened. BullionVault account openings fell 30.4% from June to their lowest level since January 2025, although the total still represented the fifth-strongest July in the company’s two decades of operation.
In US dollar terms, gold was virtually unchanged across July at about $4,026 per troy ounce. It ended the month 22.9% below February’s record and at its lowest month-end level since October. The metal has not posted more than two consecutive monthly declines since October 2022. That remains its longest such losing streak since the beginning of the historic 12-year bull market in 2000.
Gold moved higher again during European trading on Tuesday, rising about 0.45% to $4,072.94 per ounce after opening at $4,055.21 and touching an intraday low of $4,042.72. The move extended its gains for a second session, although uncertainty surrounding US-Iran diplomacy limited the advance. The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, continued to see a decline in holdings. They fell by 1.15 tonnes on Monday, the third consecutive daily reduction, bringing the fund’s holdings to 1,005.87 tonnes, the lowest since July 17. Seasonal factors may also be contributing to muted activity. “Aside from the current uncertainty over interest rates, gold prices typically trade softer mid-year,” Ash said. “The past few months’ crash and volatility mean that longer-term investors are likely to welcome a stint in the summer doldrums just as much as precious-metals traders will.”
The Federal Reserve left its benchmark rate in the 3.50%-to-3.75% range at its latest meeting, but the decision exposed disagreement within the Federal Open Market Committee. Three members, Beth Hammack, Neel Kashkari, and Lorie Logan, favored an increase.
Markets are assigning a 65% probability to a quarter-point rate increase at the Fed’s September meeting, according to CME Group’s FedWatch Tool, compared with a 35% chance that rates remain unchanged. By December, markets see an 86% probability of a quarter-point increase and only a 14% chance of no change. New York Fed President John Williams has said he remains optimistic that inflation will gradually ease but stressed that policymakers would be prepared to raise rates if price pressures fail to subside.
The economic picture is far from straightforward. One broad assessment of June inflation data put the average 12-month pace at 4%, a level that could support tighter policy. Yet annualizing June’s monthly changes alone produced a deflationary rate of roughly 1%, potentially arguing for a cut. The Fed’s September decision will therefore depend heavily on incoming economic reports. Investors are watching June job openings, July ADP private-payroll figures, weekly jobless claims, and the July nonfarm-payroll report for evidence of whether the labor market is cooling or retaining enough strength to sustain inflation.
The wider economy is also showing mixed signals. Initial estimates put inflation-adjusted second-quarter US gross domestic product growth at only 1.5%. With a 6.3% chain-price deflator, the highest since the post-pandemic period in the second quarter of 2022, much of the increase in nominal output appears to have come from inflation rather than real expansion.
Geopolitical risk remains an important source of support for gold, although recent developments have reduced immediate fears of military escalation. US President Donald Trump postponed a large-scale strike against Iran to allow more time for diplomacy, describing the talks as a “last chance” to prevent further conflict. Tehran has denied that direct negotiations with Washington are taking place, saying contacts conducted through Oman are limited to maritime security in the Strait of Hormuz.
Regional mediation efforts are continuing, but no final agreement has been announced. Oil prices rose more than 2% on Tuesday in a technical rebound after plunging over 7% on Monday, when the suspension of military strikes and the start of diplomatic efforts reduced concerns over an immediate disruption to shipping through the Strait of Hormuz. At the same time, the US Dollar Index slipped more than 0.1% toward a seven-week low of 99.42. A weaker dollar can make dollar-denominated gold less expensive for buyers using other currencies, offering some support even as easing geopolitical tensions reduce safe-haven demand.
If negotiations produce a credible agreement and restore normal shipping through the strait, oil and the dollar could weaken further. That may help precious metals through the currency channel, although gold could simultaneously lose some of its geopolitical risk premium.
Technical indicators suggest gold may be attempting to establish a floor, but the broader trend has not yet turned decisively higher. The red-dotted parabolic trend used in one long-term technical assessment has remained bearish for 20 weeks. Gold’s July trading range was also unusually narrow: the monthly continuous-contract candle covered 253 points, or 6.4% from low to high, the smallest range since August last year. The switch in the COMEX front-month futures contract from August to December added about 60 points of premium. As a result, December futures settled at $4,099, apparently above the previous week’s August settlement of $4,056. Adjusting for the contract transition, however, gold recorded a modest weekly loss of about 17 points, or 0.4%, rather than the apparent 1.1% gain.
The technical structure remains vulnerable if a durable floor does not emerge around current levels. In that case, a decline toward $3,500 remains possible. Ash noted that the gold crash and bear market of the mid-2010s may offer a historical parallel. During that period, prices found a more durable bottom only when warnings of tighter monetary policy became actual rate increases. Today’s environment differs, however, because geopolitical risks are more acute and central banks have continued to buy gold, helping absorb supply when prices fall.
The gold market is entering the second half of the year with opposing forces acting in both directions. High interest rates, uncertainty over the Fed’s next move, ETF outflows, and weaker private-investor participation are restraining demand. Technical trends also remain fragile following the steep decline from February’s record. On the other side, a softer dollar, continued central bank purchases, persistent geopolitical risk, and concerns about inflation and equity valuations are providing support. The simultaneous decline in both buyers and sellers suggests many long-term investors are choosing to wait rather than make aggressive changes to their holdings.
For gold to establish a lasting floor, markets may first need clarity from the Federal Reserve. Until then, bullion is likely to remain volatile, supported by geopolitical and economic risks but constrained by the prospect of tighter US monetary policy.
