Gold Digger: Why US$4000/oz could be gold’s ‘comfort zone

• Gold has taken a hit again this week, as the Iran War, inflation and rate hikes continue to hover over bullion
• State Street gold expert Robin Tsui says US$4000/oz has proven a comfort zone for investors to buy into the precious metal
• Despite short-term headwinds, fundamentals remain strong for gold once US rate hikes stop

A gold expert says it’s hard to see gold fall below US$4000/oz as central banks and large asset owners in Asia back the precious metal.

Robin Tsui, State Street’s vice president of APAC gold strategy, has been on a whirlwind tour of Australia this week, advising institutional investors on the firm’s outlook for the yellow metal.

Prices have fallen around 25% from late January’s highs of close to US$5500/oz and dropped further overnight on fears the US and Israel could re-escalate in Iran after their respective elections.

But Tsui told Stockhead there were plenty of buyers around current levels, with a chance momentum returns in Q1 next year.

“We do think now is a good supporting level because there’s a lot of institutional clients, mainly the central banks and also the larger, what we call the asset owner space – so the pensions, the insurance, particularly in Asia, not so Australia, but in Asia region, we’re seeing more demand side,” Tsui said.

“And that’s the reason why in Q3, based on the data from the World Gold Council, we saw a record amount of money into gold-backed ETFs.

“Even into our State Street Gold Fund that we have in Australia, we have seen a stronger demand in Q3.

“So despite the softening gold prices … there’ll be short-term pressure. The Fed’s probably going to raise rates in December, but I think after that, the momentum should kick back into the gold market, probably in Q1.”

Gold equities were also smashed, with the GDX down 5.8%.

Comfort zone

Tsui says investors he’s spoken to find US$4000/oz a ‘comfort zone’ to reenter the gold market.

His position aligns with many investment banks, which have dialled back previously bullish outlooks for the gold price but remain confident in the fundamentals.

Canada’s CIBC this week trimmed its year-end forecast to US$4500/oz, down 31% from the start of the year, but kept a forecast of US$5200/oz for 2027, down also from US$6500/oz.

Tsui expects strong central bank buying in Q3, based on ETF data.

And while rallies have been cut off at the knees in recent months, Tsui said the gold price reaction to a US Fed rate rise would historically have been more violent than the ~3% seen since the September hike.

State Street recently suggested a base case for gold in the medium term of US$4750-5500/oz, a scenario with a probability of around 60% on its read of the market.

“Demand’s historically supposed to be stronger in January because of Chinese New Year. And then we believe we’re still seeing all this structural support, like the theme of debasement trades, the theme of US dollar weakness,” he added.

“We’re putting a case forward that after the rate hike, potentially the USD strength will be capped.

“Of course, we can be wrong, but we feel highly confident the demand side of things will be supportive to the gold price going forward. It may not hit our forecast by Q1, but in 2027, as the Fed pivots from raising rates, I think that’s going to be a turning point for the gold market.”

State Street sees physical demand continuing to grow within Asia, as demand grows to vault gold closer to home outside of traditional warehouses in London and New York, and buyers seek more price discovery during Asian trading hours.

Singapore, China and Hong Kong are markets which want to establish themselves as trading hubs, Tsui said.

“In Singapore, the central bank wants to vault other central banks’ reserves, so they’re trying to replicate London and New York’s model. Same in China,” Tsui said,

“Perhaps those central banks who may not be comfortable vaulting with the Western central banks might decide to vault with China.

“That’s going to create more demand in Asia. Plus, the price discovery side of things, it’s going to be more material in the future for Asia.

“So in Asian trading hours perhaps, going forward, there’ll be more volatility.”

Winners and losers

Here’s how ASX-listed precious metals stocks are performing:

CODE COMPANY PRICE WEEK % MONTH % 6 MONTH % YEAR % YTD % MARKET CAP NRL Northstoneresltd 0.012 -8% -8% -25% -4% -8% $ 25,717,839.77 NPM Newpeak Metals 0.007 -22% -22% -61% -70% -70% $ 4,269,387.90 GGM Global Gold Mining 0.21 -2% -11% -25% -30% -19% $ 58,287,822.18 GED Golden Deeps 0.035 -10% -26% -34% -53% -44% $ 8,892,277.91 G88 Golden Mile Res Ltd 0.0055 10% -21% -8% -39% -8% $ 4,130,784.35 LAT Latitude 66 Limited 0.11 -4% -24% -41% 72% 49% $ 20,935,286.78 NMR Native Mineral Res 0.042 -22% -34% -18% -60% -22% $ 52,058,789.58 AQX Alice Queen Ltd 0.006 -8% -14% -33% 20% 50% $ 13,923,511.44 SLZ Sultan Resources Ltd 0.008 -20% -27% -20% -27% -11% $ 5,851,619.84 KSN Kingston Resources 0.031 0% -14% -67% -77% -75% $ 38,840,596.19 AMI Aurelia Metals Ltd 0.3775 -12% -25% 42% 48% 51% $ 696,796,091.28 GIB Gibb River Diamonds 0.031 -3% -9% -38% -50% -51% $ 6,649,792.80 KCN Kingsgate Consolid. 3.96 -12% -25% -35% 4% -30% $ 1,140,230,537.12 TMX Terrain Minerals 0.003 0% 0% -40% -33% -33% $ 11,820,684.52 BNR Bulletin Res Ltd 0.029 -3% -9% -37% -50% -45% $ 8,514,786.37 NXM Nexus Minerals Ltd 0.04 -9% -29% -20% -47% -43% $ 28,225,856.24 LM8 Lunnonmetalslimited 0.32 -2% -3% -7% 3% -4% $ 75,047,314.98 CST Castile Resources 0.066 2% -12% -29% -43% -47% $ 25,679,482.22 YRL Yandal Resources 0.09 -10% -38% -55% -74% -62% $ 35,968,149.28 FAU First Au Ltd 0.175 3% -3% -13% -3% 25% $ 35,753,106.17 GWR GWR Group Ltd 0.089 -11% -26% 1% 30% 14% $ 30,270,026.42 IVR Investigator Silver 0.04 -7% -27% -38% -23% -72% $ 110,160,025.58 IPT Impact Minerals 0.024 14% -14% -50% -60% -56% $ 14,642,455.40 BNZ Benzmining 3.86 2% -25% 72% 140% 119% $ 1,448,986,354.56 MOH Moho Resources 0.004 0% 0% -56% -50% -50% $ 4,230,130.68 SMS Starmineralslimited 0.037 -5% -18% -29% -24% -12% $ 9,648,289.94 MVL Marvel Gold Limited 0.012 -14% -14% -25% -29% -25% $ 18,123,957.93 PRX Prodigy Gold NL 0.048 2% -14% -12% -19% -17% $ 16,180,481.90 AAU Antilles Gold Ltd 0.006 -14% -25% -53% -32% -39% $ 22,656,049.21 RND Rand Mining Ltd 2.09 0% 0% -18% -24% -19% $ 119,439,518.10 CAZ Cazaly Resources 0.016 -16% -27% -33% -45% -47% $ 9,424,492.46 BMR Ballymore Resources 0.1 1% -20% -25% -33% -68% $ 24,970,608.50 DRE Drednought Resources 0.01 -9% -29% -47% -71% -63% $ 57,252,000.00 ZNC Zenith Minerals Ltd 0.072 -3% -10% 4% -18% -15% $ 50,466,547.25 REZ Resourc & En Grp Ltd 0.008 0% -11% -43% -65% -47% $ 7,434,218.77 LEX Lefroy Exploration 0.081 -19% -35% -55% -48% -72% $ 25,227,032.56 AS1 Asara Resources Ltd 0.11 -4% -12% -15% 53% 13% $ 251,202,177.48 CYL Catalyst Metals 4.82 -8% -17% -27% -31% -35% $ 1,380,628,291.95 KAL Kalgoorliegoldmining 0.0165 -18% -25% -56% -71% -67% $ 9,394,589.99 MLS Metals Australia 0.018 -5% 0% -10% -44% -31% $ 13,215,951.43 NMD Normandy Minerals 0.26 -10% 0% 0% 0% 0% $ 18,738,778.50 SRN Surefire Rescs NL 0.016 -6% -20% -57% -68% -68% $ 3,618,988.19 HMX Hammer Metals Ltd 0.07 -7% -22% 112% 133% 119% $ 66,064,143.80 WCN White Cliff Min Ltd 0.0215 -17% -17% 69% 18% 31% $ 75,700,387.49 AVM Advance Metals Ltd 0.035 -10% -39% -64% -65% -77% $ 19,321,479.53 GA8 Goldarc Resources 0.043 -10% -19% -46% -12% -32% $ 33,372,424.17 ARI Arika Resources 0.025 -17% -24% -14% -19% -24% $ 38,538,620.75 CTO Citigold Corp Ltd 0.015 -6% -6% -35% 36% -6% $ 51,750,000.00 SMI Santana Minerals Ltd 0.395 -8% -26% -41% -54% -57% $ 409,090,633.65 M2R Miramar 0.002 0% 0% -33% -43% -33% $ 5,273,974.77 MHC Manhattangoldcorpltd 0.017 6% -11% -19% -29% -39% $ 15,588,159.27 OBT Orbitresourcesltd 0.013 -19% -28% -35% -41% -46% $ 12,728,732.22 SVG Savannah Goldfields 0.006 0% -14% -54% -74% -68% $ 13,449,462.23 EMC Everest Metals Corp 0.088 -14% -20% -23% -27% -27% $ 23,822,217.50 GUL Gullewa Limited 0.065 -4% -10% -32% -21% -32% $ 14,397,713.35 CY5 Cygnus Metals Ltd 0.16 0% -11% 33% 23% -11% $ 203,497,933.76 G50 G50Corp Ltd 0.3 -8% -30% -61% -45% -58% $ 79,749,046.40 LAC LAC Gold Ltd 0.265 -18% -28% -35% -26% -21% $ 62,322,854.55 AAR Astral Resources NL 0.1325 -9% -28% -30% -41% -50% $ 235,145,258.40 VMC Venus Metals Cor Ltd 0.086 -9% -36% -14% 50% 2% $ 18,438,234.93 NAE New Age Exploration 0.002 100% 0% -20% -33% -50% $ 8,684,524.97 VKA Viking Mines Ltd 0.009 -10% -31% -40% 29% 13% $ 24,473,360.26 LCL LCL Resources Ltd 0.0065 -7% -7% -7% -19% 0% $ 8,438,550.06 MTH Mithril Silver Gold 0.19 -7% -21% -47% -64% -69% $ 35,622,674.02 AM3 Amara Minerals Ltd 0.004 -11% -20%