Gold Prices Rebound Towards $4,500/oz as Central-Bank Buying and Treasury Buybacks Support Market

Gold's recent price action has been marked by sharp fluctuations, with prices surging to record territory earlier in the year before suffering a steep correction due to a strengthening US dollar and shifting rate expectations. However, August brought another rebound, pushing gold towards the $4,500-an-ounce area.

Rick Kanda, Managing Director at The Gold Bullion Company, attributes this recovery to a combination of factors, including falling or stabilizing real yields, a weaker US dollar, and strong investment demand. He also notes that recent Treasury buybacks have raised concerns about long-term borrowing costs, increasing demand for gold as a hedge against risks.

Kanda believes that central-bank buying is one of the most important supports for gold, but not the single biggest driver of prices. Instead, he suggests that it is part of a longer-term diversification strategy for central banks. He also warns that a stronger US dollar and renewed monetary tightening could trigger another major correction in gold.

Kanda's base-case price range for gold by the end of 2026 is $4,800-$5,300/oz, with a bull case of $5,500-$6,000/oz if several factors line up perfectly. He also outlines a bear case scenario of $4,000-$4,400/oz if the opposite conditions occur.

In terms of the Fed's impact on gold prices, Kanda believes that it could be an important swing factor through the end of 2026. He notes that the direction of real yields and the US dollar is crucial for gold's attractiveness, and that a dovish Federal Reserve would support gold while further rate hikes would put pressure on the metal.