Money Managers Are Buying Gold—Even As Charts Flash Imminent Danger

Gold hit a record $5,600 per ounce in January before plummeting below $4,000 in July, creating opportunities for global asset managers. The drop, attributed to high energy prices, inflation from the Iran war, and rising Treasury yields, signaled a potential buying point despite the Federal Reserve's anticipated rate hike. Michael Cuggino, president of the Permanent Portfolio Family of Funds, noted the optimal buying time.

The long-term macro trend remains bullish for gold. Central banks are reassessing their gold holdings, with the Netherlands moving 86 tons from New York and Ottawa due to increasing geopolitical tensions. They increased London holdings while reducing US and Canadian allocations. The Netherlands now holds 612.4 tons of gold, valued at €72.2 billion.

A World Gold Council survey revealed that 9% of central banks plan to diversify storage locations, up from 2% in 2025, and 7% aim to expand domestic storage. Venezuela has requested the return of about $4 billion in gold from the Bank of England, and the Bank of Korea announced its first gold purchase in 13 years. Institutional investors are filling the gap left by reduced central bank purchases.

Gold-backed ETFs gained $3 billion in net inflows in July, boosting holdings by 23 tons to 4,068 tons. Despite the technical outlook indicating potential downside to $3,900, the bullish long-term trend remains intact.