Goldman Sachs is telling clients that gold's retreat from January's record highs is a pause in the bull market rather than its conclusion, according to comments from Tony Kim, the bank's global head of metals trading within fixed income, currencies and commodities, speaking on the bank's markets podcast last week. The call lands at a moment when investors are weighing how much of gold's multi-year run — which lifted the metal to repeated records on the back of central bank purchases, geopolitical risk and expectations of easier monetary policy — still has left to run.

Kim said gold remains around 20% below its January peak despite a strong August, but argued the structural drivers of the rally are still in place, framing the pullback as an elongated pause rather than a cycle top.

Two factors behind the pause

Kim pointed to two overlapping factors driving the current consolidation. The first is uncertainty around incoming Federal Reserve chair Kevin Warsh and how his policy reaction function will take shape within the context of the Trump administration's public commentary on Fed policy. Leadership transitions at the Fed matter for gold because the metal, which yields no income, tends to be sensitive to the path of real interest rates and the credibility of the inflation-fighting stance behind them. The second is the fallout from the US-Iran conflict, which has disrupted energy, agriculture and metals markets in ways that affect not only inflation expectations but also the reserve accumulation that historically recycles into precious metals.

Positioning across large parts of Goldman's client franchise has been pared back as a result, though central bank buying has remained the one flow that has held up.

Central bank demand doing the heavy lifting

Central bank demand is doing much of the structural work, according to Kim. Global mine supply runs at roughly 3,500 tonnes of gold a year, and central banks, which bought 400 to 500 tonnes annually before the confiscation of Russian reserves following the Russia-Ukraine conflict, are now purchasing closer to 1,000 to 1,100 tonnes a year — roughly double the pre-2022 pace. That acceleration is widely read as a shift in how reserve managers treat the US dollar-denominated financial system after Russian assets were frozen, with gold's status as a sanction-resistant store of value boosting its appeal. The maths leaves a smaller pool of supply available for jewellery, ETFs and physical investment, meaning less new investment capital is needed to move prices materially higher.

Asian demand challenged

Asian demand, traditionally a major pillar for both jewellery and central bank buying, has been a weaker link this year. Kim said the Iran conflict has disrupted reserve generation in the region, while countries such as India have prioritised defending their currencies to secure energy supplies over accumulating gold, with some domestic policies actively restricting gold demand. India is among the world's largest gold consumers, so softness there removes a traditionally price-sensitive source of physical buying that historically steps in on dips. A durable return of that flow, he said, likely depends on a longer-term normalisation of Middle East energy markets.

Silver: a wider range of outcomes

On silver, Kim was more circumspect. With investment demand making up only around a fifth of the market's demand base against a heavier industrial component — silver is used extensively in electronics and solar manufacturing — the metal's clearing price could plausibly sit anywhere between $50 and $100 an ounce depending on how retail, physical and investment flows align. He noted central banks are not accumulating silver the way they are gold, making it a higher-beta, more retail-driven bet rather than the fundamental trade.

$4,000 flagged as a buy zone

Goldman's institutional view remains that this is a pause built on Fed uncertainty and disrupted reserve flows, not the top. Kim identified $4,000 an ounce as a level where sovereign and institutional buying provide solid support, and recommended clients use volatility around incoming data — including this week's CPI print, which Goldman economists describe as critical — to scale into long positions ahead of the September Federal Reserve meeting. How the new Fed leadership signals its reaction to that data, and whether Middle East energy flows normalise, are the variables Kim frames as decisive for whether the pause extends or resolves.