Wall Street breaks bearish, Main Street sentiment still split after gold struggles to maintain $4,000 support amid summer doldrums

Gold prices saw another disappointing week, as softer U.S. inflation data and falling Treasury yields provided only limited support while renewed U.S.-Iran hostilities, surging oil prices, and resilient economic data kept pressure on the precious metal. Spot gold kicked off the week trading at $4,108.18 per ounce on Sunday evening, but the yellow metal quickly came under pressure as escalating tensions around Iran and the Strait of Hormuz drove oil prices sharply higher and revived concerns that energy inflation could keep the Federal Reserve cautious. Gold briefly pushed to its weekly high at $4,122.63 per ounce on Monday, but the rally faded quickly as the U.S. dollar held firm and traders remained reluctant to chase safe-haven demand. The metal found some support Tuesday after June CPI cooled to 3.5%, below expectations, helping ease concerns about an imminent Fed rate hike. Gold rebounded back above $4,050, but the move stalled Wednesday after producer-price data and broader risk-off trading kept yields elevated and prevented a sustained recovery. Selling accelerated Thursday after stronger U.S. retail sales reinforced expectations that the Fed would keep policy restrictive, while the latest U.S.-Iran escalation pushed crude prices higher and added to inflation concerns. Spot gold broke below the $4,000 level and ultimately set its weekly low at $3,959.37 per ounce on Friday before bargain-hunting helped prices recover modestly. After failing to reclaim $4,050, spot gold closed the week at $4,015.83 per ounce, leaving the metal with another weekly loss heading into the weekend. The latest Kitco News Weekly Gold Survey showed Wall Street overwhelmingly bearish on gold’s near-term prospects, while Main Street sentiment remained divided and indecisive after the yellow metal repeatedly tested the $4,000 support level. “Unchanged… though the gold price is unlikely to be unchanged, it will likely be volatile within a range,” said Adrian Day, president of Adrian Day Asset Management. “We are unlikely to see a breakout to the upside until the sentiment clearly changes to a ‘no-hikes’ Federal Reserve, while there appears solid central bank buying at these levels, supporting prices.” “Up,” said Rich Checkan, president and COO of Asset Strategies International. “We have tested support at $4,000 several times over the past couple months. It continues to hold. I believe it will again. We see renewed buying interest at that level on a regular basis. We may not be ready yet for a sustained move higher, but off this support, I do see higher prices.” “Negative,” said Adam Button, head of currency strategy at investingLive. “The tech rout is accelerating and there's a growing risk it could swallow up everything and lead to a broad 'sell everything' move.” "In the short term, further upside potential is likely to remain limited,” said Thu Lan Nguyen, head of FX and commodity research at Commerzbank. “With the ongoing escalation of the Middle East conflict and the resulting risk of another sharp spike in energy prices, expectations of interest rate hikes are likely to persist for some time.” Paul Wong, managing partner and market strategist at Sprott Inc., told Kitco News that gold tends to find support when prices fall to 90% of the 200-day moving average – and we've well overshot that at this point – but there are other reasons to expect a rebound by late summer. “It looks pretty remarkably similar [to previous pullbacks],” Wong said. “The percentage below the 200-day moving average, that's just a technical measure. Internally, I have five or six other measures that show minus two or minus three standard deviations oversold. I tend to think about things more in terms of probabilities: where are you on the distribution curve probabilities? Are you oversold? Give me a number. According to this measure, it's minus two standard deviations. According to this measure, it's minus two and a half, mi...