Goldman Sachs' global head of metals trading, Tony Kim, expects new record highs for gold despite the current correction, describing the current pullback as an 'elongated pause' rather than the end of the bull market. Speaking on The Markets podcast, Kim attributes the current pullback to Fed uncertainty and Middle East tensions, but argues that central bank buying and fiscal concerns will drive the next leg of the trade. Kim identifies $4,000 per ounce as a 'pretty solid floor' where both sovereign buying and institutional sponsorship have historically emerged, recommending investors scale into long positions near that level between now and the September FOMC meeting. The latest data shows spot gold fell as much as 2.2% to around $4,376 ($6,072) an ounce before recovering some losses, while US gold futures recorded a similar decline to trade just above $4,400 an ounce, as reported by Bloomberg. Kim suggests investors should 'build positions gradually' rather than trying to identify the exact bottom, recommending scaling into long positions closer to $4,000 during periods of market volatility.
Major money managers are rebuilding their gold holdings after prices dropped, betting that long-term drivers of the precious metal will endure even as the US Federal Reserve takes a more assertive stance on inflation. According to reports from Bloomberg, Amundi SA, Europe's largest asset manager, bought bullion on the expectation it will return to $5,000 an ounce by year-end. Fund managers at Pictet Asset Management Ltd., Robeco Institutional Asset Management BV and Fidelity International Ltd. also added to holdings cut earlier this year, during bullion's retreat from an all-time high. Several asset managers warn, however, that any further rise will be accompanied by considerable price volatility, as higher bond yields and the increasing likelihood of an interest-rate hike by the Federal Reserve could put pressure on the gold price in the short term. The latest market data shows traders responded by increasing bets on a rate hike, with markets pricing in around a 65% probability of a September increase, up from about 55% before the jobs report.
The most consequential data point in Goldman Sachs' analysis concerns who is buying gold and how much. Central bank gold purchases have more than doubled since 2022, with annual purchases rising from 400-500 metric tons to 1,000-1,100 metric tons. This represents a fundamental shift in the demand structure, as central banks now absorb roughly a third of annual mine supply — up from roughly an eighth previously. According to Kim, this means gold no longer needs the same volume of investment capital to move materially higher than in the past. The World Gold Council reports central-bank purchases recovered sharply in the second quarter with net purchases of 289 tons, the highest for any second quarter. Central banks and sovereign wealth funds in emerging economies subsequently increased their gold allocations from approximately 5 to 7 percent of their reserves in 2022 to 11 percent today. Recent World Gold Council data confirms the scale of this shift, with central banks buying 863 tonnes in 2025, well above their 2010-21 average of 473 tonnes, and estimated net central-bank demand reaching 345 tonnes in the first half of 2026.
The renewed interest in gold comes despite challenges from Fed policy and interest rate expectations. As reported by Bloomberg, higher Treasury yields and increased bets for at least one Fed rate hike before year-end are undermining support for bullion, an asset that tends to be less favored when borrowing costs rise because it doesn't pay interest. Investors' resolve was tested by Fed Chairman Kevin Warsh's Aug. 28 speech at the central bank's Jackson Hole symposium, where he warned that US inflation isn't meaningfully slowing toward a 2% target, triggering increased bets on monetary tightening. On Friday afternoon, the gold price fell by nearly 2 percent after new data showed that US employment had grown more strongly than expected, with US nonfarm payrolls increasing by 162,000 in August following upward revisions to the previous two months, according to Bureau of Labor Statistics data. The jobs growth exceeded all estimates in a Bloomberg survey, while the unemployment rate held steady at 4.1%, suggesting the US labour market remains resilient despite economic uncertainty stemming from the Iran war and elevated inflation. Currently, two developments have simultaneously complicated the outlook: uncertainty over Federal Reserve policy under new chair Kevin Warsh and the US-Iran conflict and its effect on global energy markets.
According to The Hindu BusinessLine, Lorenzo Portelli, head of cross-asset strategy at the Amundi Investment Institute, described gold as an asset that is 'cheap, a good hedge and reasonably liquid.' Arnout van Rijn, a portfolio manager for multi-asset and equity solutions at Robeco, noted that 'it's become a much more acceptable asset' and 'part and parcel of every regular or normal portfolio.' Goldman Sachs frames the current correction as a function of two simultaneous shocks: the nomination of Kevin Warsh as Fed chair and the US-Iran conflict disrupting energy markets. The firm reports 'huge reduction of positioning across large amounts of their franchise,' with one notable exception being continued central bank accumulation. Kim emphasizes that 'you don't need as much investment capital to drive prices materially higher' due to the structural shift in demand, with central banks now absorbing roughly a third of annual mine supply and the amount of gold remaining for all other purposes becoming a much smaller funnel. However, Asia's gold demand has temporarily weakened as higher energy costs and currency pressures force countries such as India to prioritise energy security.
According to The Hindu BusinessLine, Michael Cuggino, president of the Permanent Portfolio Family of Funds, described the downdraft to $4,000 in June as 'a very good buying time' and noted that 'the long-term macro story is still in place and that's bullish for gold.' Ray Dalio, the billionaire founder of Bridgewater Associates, advised investors to reduce bond holdings and put as much as 15% of their money in gold to hedge against US debt crisis risk. Goldman Sachs identifies four key tracking indicators for the next leg of the gold rally: Warsh's confirmation process and policy tilt signals, the trajectory of the Iran conflict and Hormuz disruption, the September FOMC decision, and the fiscal-debasement narrative continuing to weaken the gold-real-rate correlation. The firm notes that client activity has been unusually robust for the summer period, with investors seeking expressions that profit from volatility without committing to a directional view. For now, markets will closely watch US inflation data and the Federal Reserve's September meeting, with a stronger CPI reading potentially pressuring gold while softer inflation may revive expectations of easier monetary policy.
