Central Banks Fuel Gold Bull Market Despite Fed Headwinds

Gold prices took a hit after last week's strong US jobs number, which forced the market to reevaluate the timing of the Federal Reserve's next interest rate move. However, Goldman Sachs' global head of metals trading, Tony Kim, believes that this pullback is merely a pause in the bull market rather than its end.

Kim points out that central banks have increased their gold buying, with annual purchases now exceeding 1,000 to 1,100 tonnes. This has significantly reduced the available supply for other investors and removed bars from circulation, making it a bullish sign for gold.

The market is caught between short-term rates headwinds and a structural bid that remains intact. Kim sees sovereign buying and institutional sponsorship becoming more visible around $4,000 per ounce, which has recently become a strong centre of gravity for institutional buyers.