A major investment bank is framing gold’s sharp price decline from its peak as merely a pause in a longer bull market rather than its end.
Goldman Sachs’ Global Head of Metals Trading Tony Kim says on the bank’s The Markets podcast that uncertainty over incoming Federal Reserve chair Kevin Warsh’s policy tilt and disruptions from the US-Iran conflict are the main drivers for gold’s current decline.
Gold sits around 20% below its January peak despite a strong August, but Kim argued the structural drivers remain intact.
Says Kim,
“This isn’t the end of the [gold] bull market. It’s an elongated paused.”
He also says central banks continue to accumulate gold.
Central bank buying has roughly doubled to 1,000-1,100 tonnes annually versus 400-500 tonnes pre-2022, out of about 3,500 tonnes mined yearly, providing key support.
Kim identified $4,000 an ounce as a solid floor for scaling into long positions.
“In terms of a level that we like, $4,000 is a pretty solid floor… I think if you get a chance to scale in between now and the [September Federal Reserve meeting] with some of the volatility around the data, closer to $4,000 you want to scale into a long position there.”
Kim says silver is a higher-beta, more retail-driven play with a wider possible price range of $50 to $100 an ounce.
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