Gold’s recent price decline is seen by a major investment bank as a temporary pause in a longer bull market, rather than the end of the road.
According to Goldman Sachs’ Global Head of Metals Trading Tony Kim, uncertainty surrounding the policies of incoming Federal Reserve chair Kevin Warsh and disruptions from the US-Iran conflict are the main factors contributing to gold’s current dip.
Despite being about 20% below its peak in January, Kim believes that the structural drivers supporting gold remain strong.
In his own words, Kim states, “This isn’t the end of the [gold] bull market. It’s an elongated pause.”
Furthermore, Kim points out that central banks are continuing to increase their gold reserves. This buying trend has doubled to 1,000-1,100 tonnes annually, providing crucial support to the market.
Kim suggests that $4,000 per ounce is a reliable level for entering long positions in gold.
He adds, “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.”
Regarding silver, Kim views it as a higher-risk, more retail-driven investment with a potential price range of $50 to $100 per ounce.
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