Goldman Sachs’ Tony Kim expects gold’s current pause to give way to fresh highs, with sustained central-bank buying providing strong structural support for prices.
Mumbai: Gold’s recent slowdown is a pause rather than the end of its broader bull market, according to Tony Kim, Global Head of Metals Trading at Goldman Sachs. Kim expects bullion to regain momentum once uncertainty around US monetary policy and geopolitical tensions eases.
Gold has lost momentum since its January peak, with uncertainty over Federal Reserve policy and disruption from the US-Iran conflict weighing on demand. Spot gold fell 2.4% to USD 4,342.20 an ounce on September 1, while stronger US jobs data subsequently increased expectations of a possible Fed rate hike.
However, Kim believes the longer-term fundamentals remain supportive. Central-bank accumulation has emerged as the key pillar of the gold market, with annual purchases rising from around 400-500 tonnes before the Russia-Ukraine conflict to approximately 1,000-1,100 tonnes currently. Goldman Sachs estimates global mines produce around 3,500 tonnes of gold annually.
This increased official-sector buying means a larger share of annual mine supply is being absorbed by central banks, leaving a smaller pool available for jewellery, ETFs, bars and other forms of physical investment. Kim believes this could allow relatively modest new investment flows to have a significant impact on prices.
While gold traditionally faces pressure from higher real interest rates because it does not generate income, Kim believes the longer-term relationship may be changing. Growing concerns around government finances and fiscal sustainability could encourage investors to increase their gold allocations even as bond yields rise. According to Kim, official policy interventions and concerns over the value of fiat currencies could also support bullion demand.
Gold demand from Asia has weakened temporarily amid higher energy costs and currency pressures. Kim specifically pointed to India, where currency management and energy-security concerns have affected the appetite for gold.
He expects demand to improve once energy markets and geopolitical conditions normalise, potentially restoring some of the buying momentum seen towards the end of last year and early 2026.
Kim remains more bullish on gold than silver. While silver could deliver stronger gains if retail and investment demand accelerates, its smaller market size and greater dependence on investment flows make it significantly more volatile. Gold, meanwhile, continues to benefit from institutional participation and central-bank purchases, making it Goldman Sachs’ preferred precious-metal trade.
Despite near-term volatility, Kim remains bullish on gold and identifies USD 4,000 an ounce as a “pretty solid floor”. He sees sovereign and institutional buying around these levels and favours investors building positions gradually rather than attempting to identify the exact market bottom.
For the jewellery industry, the outlook keeps gold prices firmly in focus, with central-bank demand emerging as an increasingly important factor alongside consumer demand, interest rates and geopolitical developments.
Be the first to comment