【TMGM Financial Recap】Goldman Sachs Emphasizes That The Gold Bull Market Is Only On A Long Pause, With $4,000 As A Solid Bottom!
Goldman Sachs' Global Head of Metals Trading believes that the relative weakness in gold since February does not mean the current bull market is over.
The first factor is Wash's nomination and eventual confirmation as the new Federal Reserve Chair. The market is trying to understand Wash's policy leanings, especially in the context of the Trump administration and the extensive media coverage surrounding Trump's views on Fed policy. The second factor comes from the Iran conflict. After turmoil in the global energy market, the flow of funds that would previously circulate part of reserve funds into the precious metals market has also been affected.
However, central bank gold purchases remain an ongoing flow of funds. The continued depreciation of fiat currencies relative to gold has been a trend that has persisted for years. If fiscal sustainability becomes the true driver for investors allocating gold, then rising long-term bond yields may not continue to weigh on gold. Locally, the correlation between interest rates and gold will persist, but gold's long-term trend is being re-examined.
From currency market interventions, especially USD/JPY, to the Treasury's large-scale buyback of long-term Treasury bonds and attempts to change yield market dynamics, people tend to buy gold whenever official policy intervention occurs. Pay special attention to August CPI data, as it is the last meaningful inflation indicator before the Fed's September rate decision. How the market interprets this data will help investors judge the next direction for gold prices.
After the Jackson Hole meeting, the market needs to wait for more data and wait for the Federal Reserve to take action. In terms of price, $4000 is a level worth watching. $4000 is a fairly solid bottom. This price level reflects both sovereign buyers and institutional investor support.
Goldman Sachs' research department has also set higher medium-term targets, expecting gold prices to rise to $4,900 per ounce by the end of 2026, driven by strong demand from central banks to diversify foreign exchange reserves. Gold remains a relatively low proportion in private investment portfolios, and recent geopolitical developments, including the Iran issue and broader tensions, may prompt private investors outside central banks to diversify their allocations, including gold allocations due to weakening views on Western fiscal sustainability.
Market Insight:
Another shift is happening in the gold derivatives market; demand for call options is steadily increasing. Investors use these options to hedge their portfolios against the risk of large-scale changes in government policy, but this trading structure may also further amplify gold's two-way volatility.
