Central bank gold purchases totaling nearly 300 tonnes in Q2 have provided structural support for the metal despite a 25% price decline since January, according to Tramondo CIO Andreas Schranz. The purchases reflect a long-term diversification strategy rather than opportunistic buying, reducing reliance on traditional reserve assets.
The gold market is still seeking a new equilibrium following the recent correction, with investor positioning and technical factors likely to drive continued volatility. Schranz does not anticipate an immediate V-shaped recovery, though the metal's role as a portfolio diversifier remains intact from a strategic perspective.
The semiconductor sector experienced a sharp correction in July, with Intel down 38% and Lam Research falling 33.1%, while Nvidia bucked the trend. Schranz attributes the decline primarily to a "sell the news" reaction following Micron's exceptional Q2 results, which confirmed already priced-in expectations. Similar patterns have emerged after Nvidia's strong earnings, where high positioning and stretched valuations triggered profit-taking. The structural AI investment cycle remains intact, but the market required a pause after significant gains.
The Federal Reserve's July policy decision, which left interest rates unchanged without clear forward guidance, has reinforced a neutral stance on bonds. Schranz notes the Fed faces an unusual combination of robust growth and moderating inflation, complicated by geopolitical and energy-related risks. This uncertainty limits the scope for major duration bets, with a preference for shorter-duration positions where risk-reward appears more balanced.
Europe remains underweight in Tramondo's allocation, described as a "show me story" requiring concrete evidence of earnings growth. While macroeconomic conditions show signs of stabilization, structural challenges such as weaker productivity and limited exposure to AI investment cycles persist. A shift in positioning would require sustained improvements in earnings revisions, corporate investment, and fiscal stimulus translating into private sector growth.
U.S. equities continue to offer a more compelling combination of growth, earnings momentum, and structural investment opportunities, particularly in AI-related sectors. The broadening participation in the rally—extending beyond mega-cap tech to include industrials, energy, financials, and small-caps—reflects stronger underlying economic momentum and the broader economic impact of AI infrastructure spending.
Looking ahead, Schranz will focus on three key factors: the sustainability of U.S. disinflation, earnings revisions tied to AI investment cycles, and geopolitical risks, particularly around the Strait of Hormuz, which could disrupt energy markets and inflation expectations.
