**Why Gold Is Expected to Rise to Record Highs โ€” Transcript & Summary | SozAI** Source: https://sozai.app/transcript/gold-expected-rise-record-highs/ Gold is expected to rise to record highs due to central bank demand, geopolitical risks, and fiscal concerns, says Goldman Sachs metals head. ## Key Takeaways - Gold's bull market is paused but expected to resume with new highs ahead. - Central bank gold accumulation is a major driver of price support and scarcity. - Geopolitical risks and inflationary pressures underpin gold's appeal as a safe haven. - Fiscal sustainability concerns may alter traditional correlations between gold and interest rates. - Policy interventions in currency and bond markets often lead to increased gold demand. ## What the video covers - Gold experienced a peak in January and a strong August but remains 20% below its peak. - Current market conditions represent an elongated pause in the gold bull market, not its end. - Key factors affecting gold include the new Fed chair's policy stance and geopolitical tensions between the US and Iran. - Energy market disruptions impact inflation, reserve accumulation, and precious metals demand. - Central banks have significantly increased gold purchases post Russia-Ukraine conflict, driving scarcity. - There is a trend of fiat currency cheapening against gold, influenced by fiscal sustainability concerns globally. - Policy interventions in currency and bond markets tend to support gold buying. - Emerging market central banks, especially in Asia, remain major gold buyers despite energy crises. - Gold's traditional negative correlation with real interest rates may be breaking down in the longer term. - Investors are actively positioning for potential shifts in gold price dynamics amid uncertain economic data. ## Chapters 1. 00:00 Introduction and Market Context 2. 00:59 Impact of Fed Chair Nomination and Geopolitical Risks 3. 02:00 Central Bank Gold Accumulation and Market Positioning 4. 02:48 Fiat Currency Debasement and Fiscal Sustainability 5. 03:35 Policy Interventions and Currency Market Effects 6. 04:21 Investor Behavior and Market Positioning Post-July FOMC 7. 05:13 Gold and Real Interest Rate Correlations 8. 06:05 Central Bank Demand and Scarcity of Gold Supply 9. 06:53 Asian Demand and Energy Crisis Impact 10. 07:36 Summary and Trade Outlook Answers ## Questions about this video Is the gold bull market over according to Goldman Sachs? No, Goldman Sachs views the current market as an elongated pause in the gold bull market, expecting the trend to resume and new highs to be reached in the future. What role do central banks play in the gold market? Central banks have significantly increased their gold purchases, nearly doubling prior levels since the Russia-Ukraine conflict, which reduces available gold for other uses and supports higher prices. How do geopolitical risks affect gold prices? Geopolitical tensions, especially between the US and Iran, disrupt energy markets and inflation expectations, which in turn influence gold demand as a safe haven asset. ## Full Transcript โ€” Download SRT & Markdown 00:00 Speaker A This is The Markets. I'm Chris Hussey, and today is Wednesday, September 2nd, and I'm joined from the Goldman Sachs trading floor in London by Tony Kim, who is our global head of metals trading within fixed income, currencies, and commodities. Tony, hey, thanks so 00:17 Speaker A much for joining us in The Markets. Thanks, Chris. All right. I want to get to what's happened with gold this year because we had a peak earlier in January. August was actually a pretty good month for gold, but we're still 20% 00:31 Speaker A off that peak. Have we seen the peak behind us now, or is there more to go in gold? Yeah, that's a great question and something our clients have really been focusing on, I would say, over the last few weeks. You know, from our 00:43 Speaker A perspective, this isn't the end of the bull market. It's an elongated pause, and why elongated? I would say it's really two factors that we're looking at, and they kind of happen simultaneously, so it's hard to disaggregate what's causing what. But number one is 00:59 Speaker A the nomination of Warsh and the ultimate confirmation of him as the new Fed chair, and I think the market's trying to understand what his reaction function and policy tilt is going to be, especially within the context of the Trump administration and a lot 01:14 Speaker A of the headlines surrounding Trump's view of Fed policy. And then the other aspect is really the conflict between the US and Iran. And the other aspect is really the conflict between the U.S. and Iran. And what happened there was how 01:25 Speaker A does the energy market disruption, but not just energy for agriculture, for metals, how does this ultimately impact not just inflation and therefore the policy response in gold, but how has it impacted the reserve accumulation or lack of reserve 01:43 Speaker A accumulation as a lot of these energy markets have been disrupted? And so a lot of those reserves that would historically recycle some And so a lot of those reserves that would historically amount into precious metals markets has certainly been disturbed. So at the moment, I think we've seen a huge reduction of 02:00 Speaker A positioning across large amounts of our franchise. The one flow that does remain, which we can get into later, is the central bank accumulation. But high level, we think it's a pause and ultimately the bull trend will resume and new highs are going to 02:13 Speaker A be in the future. All right, so there are a lot of factors as you point out. You have been inflation coming off the Strait of Hormuz, you have that geopolitical risk coming off the Strait of Hormuz, you've also got higher rates for longer 02:24 Speaker A though, and for a metal that carries no coupon, gold, I would imagine there's competition there from those higher rates. How much of a role is that playing? Which role do you think is the most important going forward in terms of how gold's 02:38 Speaker A going to perform? So I, I think the notion of debasement, and there are a lot of words and of debasement, and there are a lot of words and phrases around this, de-dollarization, and phrases. Really, the way I would characterize this is 02:48 Speaker A there's been a cheapening of fiat currency versus gold. That's been a trend that we've been in for now several years. And if fiscal sustainability becomes the real driver of whether people want to allocate into gold, and fiscal sustainability is a concern 03:05 Speaker A not just in the West, but in Japan, then you might actually start to see the correlations break down a little bit. Then you might actually start to see the correlations break. So in other words, higher back-end bond yields because of concerns about 03:15 Speaker A the fiscal situation could lead to allocations going into gold. Now, look, locally, we do think that these rates and gold correlations will hold, but the longer-term trajectory is certainly being called into question. And what I would point out is this 03:30 Speaker A has really been driven by a lot of policy changes, especially over the last month. 03:35 Speaker A If you look at the intervention into currency markets, in particular with dollar If you look at the intervention into currency markets in... yen, as well as the U.S. 03:41 Speaker A Treasury repurchasing larger amounts of the long end of the curve and trying to potentially change the dynamics of the yield markets, I think anytime you see official policy intervention, people tend to buy gold. Yeah, that's such a great point. I mean, you can 03:55 Speaker A make an argument that we've already seen some of those correlations break down because we do have this higher for longer rates environment, and yet gold did pretty well in August, even as that happens. So are investors starting to talk about that, that the 04:07 Speaker A correlations are breaking down, the old playbook doesn't work anymore? You know, there's certainly some that believe that's the view, and then there are others that are trying to hedge their portfolio in case that does become the new prevailing sentiment 04:21 Speaker A globally. And what I would say is over the last month we've had a very active client franchise, despite the fact that we've been in the summer, you know, post the July FOMC, then with these policy interventions, and then post 04:36 Speaker A Jackson Hole, a lot of clients are looking at expressions to put on some sort of convexity plays and tweaking them as the data rolls in, in terms of how they want to position themselves. Fact that we've been in the summer, you know, post 04:31 Speaker A the July. Look, the challenge always is going to be not only is it the reaction function, but the data itself. And so obviously we still have a few of those releases as we approach the September FOMC. Yeah, no, and the data, of course. Inflation is 05:00 Speaker A a big part of that data. It's a component of real interest rates. If we go to the conventional correlations, you know, gold tends to trade with real rates. And when I'm talking about real rates, I'm talking about a risk-free rate, less inflation 05:13 Speaker A expectations. Tony, how is that relationship holding up in this market? Look, in the short term, I think it certainly holds. The day-to-day trading has been correlated. It's been correlated, but I think that breakdown really occurred on a longer-term trend in 05:23 Speaker A but I think that breakdown really occurred on a long-term. 2022 when we had the Russia-Ukraine conflict and the confiscation of Russian central bank reserves. And what we've seen from that point on has been a sustained long-term accumulation of physical gold 05:38 Speaker A from mainly emerging market central banks. But just to put rough numbers around this, we mine about 3,500 metric tons of gold a year. Prior to Russia-Ukraine, central banks used to purchase around 400 to 500 tons a year. Banks used to purchase 05:50 Speaker A around 400 to 500 tons a year. They're now purchasing something closer to a thousand, eleven hundred tons a year. What that means is the amount of gold remaining for all other purposes, jewelry, backing up the ETF bars, and physical investment 06:05 Speaker A is a much smaller funnel, and so you don't need as much investment capital to drive prices materially higher. It's a great point. Let me, let me drill down on that a little bit because, you know, Asia has always been a big source of 06:16 Speaker A that demand for both the jewelry side and the central bank side. How is that holding up given everything that's happened with the energy crisis? You pointed out that reserves are being redirected. 06:27 Speaker A Talk to us a little bit about what you're seeing in terms of demand out of Asia. Sure. Look, so I think end of last year coming into this year we were seeing everything firing on all cylinders on demand. You had China retail 06:39 Speaker A demand, you had Indian physical demand, you had central bank demand, and I think the Iran conflict actually challenged a lot of those sources of demand. Number one, you have a lot of reserves that are not getting generated because of the disruption in energy 06:53 Speaker A markets out of the Middle East. And you do have some emerging economies, India being a prime example, where they need to defend currency in order to obtain energy security. 07:02 Speaker A And, you know, accumulating gold is not maybe, you know, top of mind for them right now. And we've... 07:11 Speaker A demand to keep control of the currency there. So, you know, I think it's certainly challenged the demand side of the equation in Asia, and you would probably need to see a longer -term normalization of energy markets and the conflict in Hormuz for that 07:25 Speaker A flow to return in the magnitude that it did. Again, another reason why we're in a pause, not necessarily the end of a cycle. Such a great point. Okay, before I get on to the best trade here, I want to ask you the Rudolph 07:36 Speaker A the Red -Nosed Reindeer question, which is silver. Red Nose Reindeer question, which is silver, because where there's gold, there's silver. And what's going on with silver? Because that was up a lot in August, but boy, has it been volatile this year. What are 07:48 Speaker A you seeing in the silver market? Yeah, a lot of people are probably not going to like my answer, both the bulls and the bears. Look, at the end of the day, silver is a much smaller market. About half of the demand side balance 07:59 Speaker A sheet for silver is industrial demand. But ultimately, the 20 percent of investment demand is going to determine where this clears. The silver market can clear at $50 this clears the silver market. an ounce, $80 an ounce, or $100 an 08:12 Speaker A ounce, depending on what that retail demand and physical demand and investment demand is doing. 08:17 Speaker A When you saw all of those things come together at the same time where Indian physical demand was very strong, Chinese retail, ETFs in the West, you saw what could happen in January. Usually, when you start to see vol accelerate higher with the 08:33 Speaker A price going all accelerate higher. With the price going higher, you're in a very unstable setup and higher, you're in a very unstable. then you had these massive down days of 20%, 30 % lower. That's the way silver has been and probably always will 08:42 Speaker A be. For me, if you have a sense that retail is going to get a hold of this theme again, they're going to deploy in silver, it's certainly a higher beta outcome in a higher gold market. For me, the fundamental trade still remains gold. 08:56 Speaker A That's where the institutions are deployed. That's what central banks are buying. As I are deployed. That's what central banks are buying. And as I always say, central banks so far, to my knowledge, aren't actively accumulating silver. So you kind of have to bet 09:05 Speaker A on the retail reaction function. Yeah, no, such a great point. Central banks, they're gold buyers. All right, let's put a bow on it, Tony. What's the trade? Look, we're still bullish gold. I think the challenge here is post -Jackson Hole. We need some 09:17 Speaker A data to come out and obviously wait to see what the Fed does. But in terms of a level that we like, 4 ,000 is a pretty solid floor. We see sovereign buying at those levels. We see institutional sovereign buying at those levels. We 09:28 Speaker A see sponsorship at those levels. And so I think if you get a chance to scale in between now and the FOMC with some of the volatility around the data closer to 4K, you want to scale into a long position there. All right, let's 09:41 Speaker A talk a little bit about that data between now and the FOMC. What are you looking for most closely in the data side? I think for us, it's really the inflation data that's going to come out. So CPI next week before we actually see 09:52 Speaker A the Fed. And what I'm really curious about is, you know, there are a lot of different moving pieces. really curious about is, you know, there are. What's the market's reaction function to the print? In other words, is it going to try and predict 10:02 Speaker A that the Fed is going to then, you know, for sure hike in September and flatten the curve? Are you actually going to see some uncertainty about what the Fed's reaction function would be? And I think depending on how the market is interpreting the 10:14 Speaker A data, we'll get a better sense of which way gold's going to be leaning. That is terrific. Appreciate that, Tony. Thanks so much for joining us. Thanks, Chris. Appreciate it. 10:22 Speaker A That does it for this week's episode of The Markets. I'm Chris Hussey. Thanks for joining us. The opinions and views expressed herein are as of the date of publication, subject to change without notice, and may not necessarily reflect the institutional views of Goldman Sachs or its affiliates. The material 10:39 Speaker A provided is intended for informational purposes only and does not constitute investment advice, a recommendation from any Goldman Sachs entity to take any particular action, or an offer or solicitation to purchase or sell any securities or financial products. This material may contain forward -looking 10:52 Speaker A statements. Past performance is not indicative of future results. Neither Goldman Sachs nor any of its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the statements or information contained herein, and disclaim any liability whatsoever for reliance 11:06 Speaker A on such information for any purpose. Each name of a third -party organization mentioned is the property of the company to which it relates, is used here strictly for informational and identification purposes only and is not used to imply any ownership or identification purposes 11:14 Speaker A only and is not used to imply any ownership. license rights between any such company and Goldman Sachs. A transcript is provided for convenience and may differ from the original video or audio content. Goldman Sachs is not responsible for any errors in the transcript. 11:26 Speaker A This material should not be copied, distributed, published, or reproduced in whole or in part or disclosed by any recipient to any other person without the express written consent of Goldman Sachs. Copyright 2026 Goldman Sachs. All rights reserved. Topics: gold price gold bull market Goldman Sachs central bank gold buying geopolitical risk inflation Fed policy energy market disruption real interest rates precious metals --- This is the markdown twin of https://sozai.app/transcript/gold-expected-rise-record-highs/ โ€” the same content, without the markup. Published by SozAI (https://sozai.app). Reuse and quotation are allowed with attribution and a link back. Machine-readable index: https://sozai.app/llms.txt ยท data API: https://sozai.app/api/