Gold's relative weakness since February doesn't signal the end of its bull market, according to Anthony Kim, global head of metals trading at Goldman Sachs Group. When asked on the firm's podcast "The Markets" whether the record high of $5,589.38 per ounce set in late January could mark the cycle's peak, Kim responded: "From our perspective, this is not the end of the bull market; this is an extended pause."

Kim attributes the seven-month-plus correction to two key factors. The first involves Warsh's nomination and eventual confirmation as the new Fed chair. Kim noted that markets are trying to interpret Warsh's "reaction function" and policy leanings, particularly within the context of the Trump administration and the heavy media coverage surrounding Trump's views on Fed policy. The second factor stems from the Iran conflict. He pointed out that after disruptions to global energy markets, the fund flows that historically recycled some reserve capital into precious metals have also been affected.

"Those flows that have historically recycled part of reserves into precious metals have certainly been disrupted," Kim said, "and we've observed a significant reduction in substantial positioning across our client base." However, central bank gold purchases remain a flow that hasn't disappeared. "The only flow that still exists... is central bank accumulation," he added. In his view, this is just a pause, and the bull market will ultimately resume, pushing prices to new records in the future.

Kim also addressed the impact of high yields on gold. He noted that the persistent depreciation of fiat currencies relative to gold is a multi-year trend, and if fiscal sustainability becomes the true driver of investor allocations to gold, rising long-term bond yields may not continue to suppress the metal. "If fiscal sustainability becomes the real driver of whether people allocate to gold—and fiscal sustainability isn't just a Western concern, but also Japan's—then you could start to see some decoupling of that correlation. In other words, if long-end yields move higher because of fiscal concerns, that might actually drive allocations into gold."

Kim added that the interest rate-gold correlation will remain locally, but gold's longer-term trajectory is being re-evaluated. Recent policy shifts by the U.S. government are also part of this logic. From currency market intervention, especially USD/JPY, to the Treasury's large-scale buybacks of long-dated bonds aimed at altering yield curve dynamics, Kim said, "Whenever there's official policy intervention, people tend to buy gold."

Despite the summer lull, the post-July-FOMC period, and the conclusion of Jackson Hole, Goldman's clients remain highly active. Kim said many are studying how to structure convexity trades and adjusting positions as data comes in. "The challenge is always not just the reaction function itself, but also the data," he said.

September CPI is a key observation point. Kim is particularly focused on the August CPI report, as it's the last meaningful inflation metric before the Fed's September rate decision. "What I'm really curious about is that there are many different variables at play," he said. "What's the market's reaction function to the data itself? In other words, will the market try to front-run a certain Fed hike in September, flattening the curve? Will you actually see genuine uncertainty about the Fed's reaction function?" He believes how the market interprets this data will help investors gauge gold's next direction.

Kim stated clearly: "We remain bullish on gold." He also noted that post-Jackson Hole, the market needs more data and Fed action. On price levels, he sees $4,000 as a key figure. "In terms of levels we like, $4,000 is a fairly solid floor. We see sovereign buyers and institutional support at that level." Kim further suggested that if gold approaches $4,000 on data-driven volatility between now and the Fed meeting, "you should be building long positions there gradually."

On September 2nd, Goldman Sachs Research set higher medium-term targets. Analysts Lina Thomas and Daan Struyven project gold prices reaching $4,900 per ounce by the end of 2026, driven by strong demand from central banks diversifying their foreign exchange reserves. The analysts also cautioned that rising investor demand for hedging via gold derivatives could amplify price swings. "Although increased use of gold-related derivatives may exacerbate gold price volatility, we expect gold to extend its recent gains through the second half of 2026," the pair wrote.

Goldman Sachs Research believes continued central bank purchases and reduced expectations for U.S. rate hikes in 2026 will continue to support gold. The firm views central bank demand as a key structural driver of the rally. Analysts expect Fed-related headwinds to fade further, as Goldman economists judge that declining inflation trends will keep the Fed on hold this year. Goldman also sees medium-term factors that could push prices above the $4,900 forecast for 2026. Analysts noted that gold's share in private portfolios remains low, and recent geopolitical developments, including the Iran issue and broader tensions, could push private investors beyond central banks to increase diversification—including adding gold due to waning confidence in Western fiscal sustainability.

Gold options may amplify ups and downs. Another shift is underway in the gold derivatives market: rising demand for call options. Thomas and Struyven explained that investors use these options to hedge portfolios against the risk of major government policy changes, but this trade structure could also amplify two-way volatility in gold. Goldman Sachs Research noted that when gold prices rise and approach key strike prices for certain call options, dealers who sold these options may be forced to buy gold to hedge their short exposure, further fueling the rally. Conversely, if prices fall, dealers may unwind these hedges by selling previously accumulated gold, pushing prices lower. Therefore, the research team's $4,900 forecast for 2026 does not account for robust hedging demand in gold derivatives. This implies, on one hand, that derivative demand adds upside risk to breaking above that target; on the other, it also means gold could see "greater two-way volatility" during its advance.