Gold's Elongated Pause: Central Banks Rewrite Demand Equation

Gold prices have stalled at 20% below their January peak, but according to Goldman Sachs' global head of metals trading Tony Kim, this is an 'elongated pause' rather than a reversal. The bull market in gold is not over; it's just paused due to positioning and policy uncertainty.

Kim argues that the demand equation for gold has fundamentally changed: central banks have more than doubled their annual purchases to 1,100 metric tons since the Russia-Ukraine conflict, absorbing a third of global mine supply. This leaves a smaller pool of metal available for investors, requiring less capital to drive prices higher.

The most actionable number in Kim's framework is $4,000 per ounce, which he considers a 'pretty solid floor' for gold - a level where both sovereign buyers and institutional money have historically emerged to defend the metal. He advises scaling into long positions near this level ahead of the September FOMC meeting.