Gold Pullback Fails to Deter Bullish Bets! Fund Managers Expect New Highs Within Two Years

Despite a recent notable pullback in gold prices, fund managers remain optimistic about the outlook for the next one to two years.While the market expects the Federal Reserve may hike rates again, many investors believe that ongoing geopolitical tensions, the relentless growth in government debt, and weakening confidence in the US dollar will continue to support gold, pushing prices to new highs over the next 12 to 24 months.

Preliminary data from the World Gold Council shows that net gold purchases reported by central banks in September amounted to around 63 tons, marking the highest single-month level since November 2024. These figures are compiled by the council based on information from central banks and the International Monetary Fund (IMF).

In January this year, gold prices quickly surged above $5,500 per ounce, setting a historical record. Prices have subsequently retreated sharply but remain at historically high levels.Fund managers believe that in an environment where economic outlook, financial markets, and geopolitical risks are interwoven, demand for safe-haven assets is expected to persist.

Government Debt and Dollar Credibility Become Core Drivers in Bullish Gold Thesis

At the precious metals seminar hosted by the Financial Times on Wednesday, Troy Asset Management fund manager Charlotte Yonge anticipated that gold will hit new historical highs within the next 12 to 18 months.

She believes that the continued deterioration of government fiscal conditions makes gold an ideal hedge tool. With US government debt continuing to climb, the market widely expects that when the next economic recession arrives, global central banks may once again resort to money printing as economic stimulus.

Yonge pointed out: "Gold cannot be printed in the same way."

Paul Carne, Chief Investment Officer for EMEA at Aon Investments, also expects gold prices will hit record highs within the next two years. He links gold's appeal to the dollar's status as a global reserve asset.

Carne stated: "When you weaponize the dollar... don't be surprised when people stop using it. So, what will they switch to?"

In his view, gold could become an alternative outside of the US dollar. Yonge also believes that emerging market institutions are seeking reserve assets besides the dollar, and gold is likely more attractive than other currencies such as the euro or yen.

Peter Marrone, Chairman and CEO of Allied Gold, offered a more severe assessment. He urged investors to consider whether the global economy is on the verge of a financial crisis, stating: "In my view, we are standing on the edge of a financial event."

Marrone noted that as the macroeconomic environment becomes more unstable, family offices are massively increasing gold holdings and reallocating some investments from government bonds into gold to diversify asset risk.

Ian Cockerill, CEO of Endeavour Mining, also believes the macroeconomic environment, declining market confidence in fiat currencies, and central bank concerns about their own currency values are all supporting gold.

He said: "These factors are providing extremely solid support for gold prices."

As for the short-term trend in gold prices, Cockerill does not believe a bottom is firmly established. He stated: "Is $4,000 the bottom? I don't know. But even if it isn't, this level is already very close to the bottom for the next upward move in gold prices."

Central Bank Gold Demand Remains Strong, but Some Countries Start Selling

Suki Cooper, Head of Global Commodities Research at Standard Chartered Bank, said central bank demand for gold remains "very strong." However, central bank gold purchases are not one-way: this year, some countries have also sold gold to raise funds, with some transactions occurring after the US and Israel waged war on Iran.

Nevertheless, executives at the seminar still expect that as market confidence in the dollar fades and investors actively seek alternative assets, central banks may further increase their gold reserves in the future.

According to fund managers, changes in central bank demand combined with shifts in private investor asset allocation provide support for gold’s medium- to long-term trend. Even if gold prices may still be impacted by Federal Reserve interest rate policy in the short term, changes in government debt, currency credibility, and the structure of global reserve assets remain key reasons for their bullish outlook on future gold prices.