Goldman Sachs says gold's retreat from January's record highs is a pause, not the end of its bull run, and flags $4,000 an ounce as a buy zone heading into the September Fed meeting. The bank's global head of metals trading points to Fed-chair uncertainty and Iran-conflict disruption as the drivers behind the pullback, while central bank buying keeps running at roughly double its pre-2022 pace.
Gold sits about 20% below its January peak despite a strong August, but Goldman Sachs says that gap is a pause rather than a cycle top. Tony Kim, the bank's global head of metals trading within fixed income, currencies and commodities, told the bank's markets podcast that $4,000 an ounce marks a solid floor for scaling into long positions.
Fed uncertainty and the Iran conflict drive the pause
Kim points to two overlapping factors behind gold's retreat. The first is uncertainty over how incoming Federal Reserve chair Kevin Warsh will shape policy against the backdrop of the Trump administration's public commentary on the Fed. The second is the fallout from the US-Iran conflict, which has disrupted energy, agriculture and metals markets and fed into inflation expectations.
That disruption has pared back positioning across parts of Goldman's client base, Kim said. Central bank buying, however, has been the one flow that has held up through the pullback.
Central banks buy at double their pre-2022 pace
Central banks now purchase 1,000 to 1,100 tonnes of gold annually, roughly double the 400 to 500 tonnes they bought each year before Russia's reserves were frozen. Out of about 3,500 tonnes mined a year, that leaves a smaller pool available for jewelry and ETF investment, meaning less new capital is needed to move prices materially higher.
Asian demand, traditionally a pillar for both jewelry and central bank buying, has weakened this year. Kim said the Iran conflict has disrupted reserve generation in the region, while countries such as India have prioritized defending their currencies to secure energy supplies over accumulating gold.
Silver's wider range of outcomes
Kim was more cautious on silver, noting investment demand makes up only about a fifth of the metal's demand base against a heavier industrial component. He said silver's clearing price could plausibly land anywhere between $50 and $100 an ounce depending on how retail, physical and investment flows align.
Central banks are not accumulating silver the way they are gold, Kim said, which makes it a higher-beta, more retail-driven bet rather than the fundamental trade gold represents. Goldman's institutional view stays bullish on gold, with this week's CPI print flagged as the key catalyst ahead of the Fed's September interest rate decision.
Source: InvestingLive
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