Gold’s rally has stalled, but it’s not the end of the bull run, according to Tony Kim, global head of metals trading at Goldman Sachs. Uncertainty over Federal Reserve policy and the disruption caused by the US-Iran conflict have temporarily weakened several sources of demand. The longer-term picture, however, remains supportive because central banks are buying more gold than they did before the Russia-Ukraine war. According to Kim, gold could make new records once the current market uncertainty clears, with the $4,000-an-ounce area looking attractive for investors willing to build positions gradually.
The rally is paused, not finished
Gold’s record-setting run has lost momentum after its January peak. Kim describes what followed as an “elongated pause” rather than a reversal of the bull market. Two developments have complicated the outlook at the same time. The first is uncertainty over Federal Reserve policy under new chair Kevin Warsh. Investors are trying to understand his approach to inflation and interest rates, particularly against the backdrop of President Donald Trump’s views on monetary policy.
The second is the US-Iran conflict and its effect on global energy markets. The disruption has not been confined to oil. It has affected agriculture and metals markets while also disrupting the flow of reserves through energy-exporting economies.
Kim argues that some of those reserves would ordinarily find their way into precious metals. That process has been disturbed by the conflict.
The market has already reflected some of that uncertainty. Gold fell more than 2% on September 1 as Treasury yields and the dollar rose, with spot gold down 2.4% at $4,342.20 an ounce in afternoon trading. Strong US jobs data on September 4 pushed gold lower again as markets raised their expectations of a September Fed rate hike.
Kim says positioning has fallen sharply across much of his client franchise. The important exception is central-bank buying. “The one flow that does remain,” he said, “is the central bank accumulation.” His larger view is that the bull trend will eventually resume and gold will reach new highs.
High rates may not always hurt gold
Gold normally faces competition when interest rates rise because bullion produces no income. Investors can instead earn a yield by holding government bonds. Kim accepts that relationship in the short term. Day-to-day movements in gold still respond to real interest rates, which are broadly the risk-free rate adjusted for inflation expectations.
But he believes the longer-term relationship is being called into question. The issue is what happens if bond yields rise because investors are increasingly worried about government finances. In that situation, higher yields could actually coincide with greater demand for gold.
Kim describes the broader trend as a “cheapening of fiat currency versus gold” and says fiscal sustainability could become an increasingly important reason for investors to allocate money to the metal. “Higher backend bond yields because of concerns about the fiscal situation could lead to allocations going into gold,” he said. This is particularly relevant because fiscal concerns are not limited to the United States. Kim also points to Japan.
He does not argue that the traditional relationship between rates and gold has disappeared. Locally, he says, he still expects the correlation to hold. His point is that its longer-term trajectory is becoming less certain.
He also points to recent official interventions in currency and bond markets. In particular, he mentions intervention involving dollar-yen and the US Treasury buying larger amounts at the long end of the Treasury curve. In his view, such interventions can encourage investors to buy gold. “I think any time you see official policy intervention, people tend to buy gold,” Kim said.
The central-bank buying that changed the market
The strongest part of Kim’s bullish argument is the change in central-bank demand. He identifies 2022 as an important turning point. The Russia-Ukraine conflict and the freezing of Russian central-bank reserves coincided with what he describes as a sustained increase in physical-gold accumulation by emerging-market central banks.
The numbers illustrate the change. Global mines produce roughly 3,500 tonnes of gold a year, according to Kim. Before the Russia-Ukraine war, central banks bought around 400 to 500 tonnes annually. They are now buying closer to 1,000 to 1,100 tonnes.
World Gold Council data broadly confirms the scale of the shift. Central banks bought 863 tonnes in 2025, well above their 2010-21 average of 473 tonnes. In the first half of 2026, estimated net central-bank demand reached 345 tonnes.
The consequence is important for the rest of the market. A much larger share of annual gold production is being absorbed by central banks, leaving a smaller quantity available for jewellery, ETFs, bars and physical investment. As Kim puts it, “the amount of gold remaining for all other purposes” has become a much smaller funnel. That means the market may not need a huge amount of fresh investment money to push prices materially higher. “And so you don’t need as much investment capital to drive prices materially higher,” he said.
Asia has temporarily lost some of its buying power
There is, however, a significant counterweight to the central-bank story. Kim says demand was strong at the end of last year and into 2026. Chinese retail buyers were active, Indian physical demand was strong and central banks were buying. The Iran conflict disrupted several of those flows.
The problem is partly the effect of higher energy costs on countries that import large quantities of energy. Reserves that might otherwise have been available for gold purchases can instead be needed to pay for energy or support currencies.
Kim says some emerging economies need to defend their currencies to maintain energy security. “India being a prime example, where they need to defend currency in order to obtain energy security and, you know, accumulating gold is not maybe top of mind for them right now. And we’ve seen some policies in India that are trying to restrict the amount of domestic demand to keep control of the currency there. So, you know, I think it’s certainly challenged the demand side of the equation in Asia, and you would probably need to see a longer-term normalization of energy markets and the conflict in Hormuz for that flow to return in the magnitude that it did.”
This helps explain why he sees the current weakness as a pause rather than a change in the longer-term cycle. A recovery in Asian demand would probably require a longer-term normalisation in energy markets and around the Strait of Hormuz. Kim says that would be needed for those flows to return to their previous magnitude.
Gold versus silver
Kim is considerably more cautious about silver. The silver market is much smaller than the gold market, and around half of its demand comes from industry. Investment demand, however, can have an outsized effect on the price. Kim says silver could clear at $50, $80 or even $100 an ounce, depending on what happens with retail, physical and investment demand.
He points to January as an example of what happens when several sources of demand arrive at the same time. Strong Indian physical demand, Chinese retail buying and Western ETF demand combined to produce a sharp move.
But rapidly rising prices accompanied by accelerating volatility can indicate an unstable market. Silver subsequently experienced very large declines, including 20% and 30% down days. Kim’s view is that silver offers a higher-beta outcome if gold rises and retail investors return to the precious-metals trade.
But he prefers gold because institutions are deployed there and central banks are buying it. Silver, by contrast, requires investors to make a bigger bet on retail demand. “The fundamental trade still remains gold,” Kim said.
Why the $4,000 floor for gold matters
Kim’s bullish view ultimately comes with a specific level. “We’re still bullish gold,” he said. But he expects volatility around the economic data and the Federal Reserve meeting. His preferred accumulation area is around $4,000 an ounce. “In terms of a level that we like, 4,000 is a pretty solid floor,” Kim said.
He says he sees sovereign buying and institutional sponsorship around that level. His preference is therefore to build a position gradually if gold approaches $4,000 rather than attempt to time the exact bottom. “I think if you get a chance to scale in between now and the FOMC with some of the volatility around the data, closer to 4K, you want to scale into a long position there,” he said.
The immediate market test is inflation data, particularly CPI. Kim wants to see not only what the inflation number shows but how investors interpret it in terms of the Fed’s likely response.
A strong inflation reading could reinforce expectations of tighter monetary policy and weigh on gold. A softer reading could have the opposite effect. But the key uncertainty, in Kim’s view, is the market’s understanding of the Fed’s “reaction function”.
That leaves his overall position fairly clear. Gold can remain volatile in the near term as investors grapple with interest rates, inflation and the fallout from the Iran conflict. But the structural increase in central-bank demand may remain a powerful force underneath the market.
