Midas Touch's Florian Grummes predicts an unequivocal breakout in gold, projecting its price to reach $2,535 by summer.

The gold market is currently in a consolidation phase following its record highs, but according to one market strategist, the precious metal is poised for further gains.

Florian Grummes, Managing Director at Midas Touch Consulting, noted in his recent market commentary that gold's rally above $2,200 an ounce has marked the end of a 13-year correction and consolidation period, during which prices fluctuated between $1,900 and $2,075 an ounce.

Grummes emphasized that despite potential short-term pullbacks or temporary consolidations, this signifies the beginning of a new significant uptrend in the precious metals sector.

While there's a possibility of gold prices retracing to around $2,075, Grummes maintains an initial price target of $2,535 an ounce. He views these corrections as buying opportunities.

Grummes anticipates gold reaching his target within three months. Presently, the market appears to find initial support above $2,150 an ounce, a level that prompted considerable selling in early December. April gold futures recently traded at $2,166.20 an ounce, showing a 0.66% decrease on the day.

Grummes suggested that after the two-and-a-half-month consolidation period, the ongoing rally is unlikely to halt after just three weeks. He expects the new uptrend to continue swiftly, albeit with volatility.

One reason for Grummes' optimism regarding a brief correction is the limited attention gold's breakout rally has received from generalist investors and mainstream media. He believes that the neutral sentiment in the gold market currently doesn't hinder the potential for higher prices.

Moreover, with increasing risks in overheated equity markets and potential economic uncertainty, Grummes anticipates investors will soon turn their focus to gold as a safe-haven asset.

While Western investors continue to favor tech stocks, Grummes observed that Asian investors are actively purchasing gold. He expects Chinese investors to persist in buying gold, influenced by the government's example. The People’s Bank of China has been consistently increasing its gold reserves, acquiring 12 tonnes of the precious metal last month.

Grummes highlighted China's dominance in the physical gold market due to strong demand from the central bank and buying fervor at the onset of the Year of the Dragon. He noted that through arbitrage trading, the paper gold market in the West is facing increasing pressure. Overall, Grummes believes the macroeconomic environment remains highly favorable for the gold price.