Gold has started September on the back foot, but the broader outlook for the precious metal remains firmly bullish as global uncertainty, central bank buying and record government debt continue to support long-term demand.
After reaching historic highs during August, gold has entered a period of profit-taking following a sharp shift in expectations for US interest rates. While the recent correction has unsettled some investors, major investment banks including Goldman Sachs believe the pullback is likely to be temporary.
Gold retreats after August rally
Spot gold slipped below US$4,400 an ounce during Monday’s trading before recovering some ground, while US gold futures also moved lower. The decline follows Friday’s sell-off, when gold recorded its biggest one-day drop in almost three months after Federal Reserve Chairman Kevin Warsh warned inflation remains a significant concern.
Warsh’s comments at the Jackson Hole Economic Symposium signalled the Federal Reserve is prepared to keep monetary policy tighter for longer if inflation does not continue to moderate. Markets quickly increased expectations that another US interest rate rise could come at the Fed’s September meeting.
Higher interest rates generally strengthen the US dollar and increase bond yields, both of which can create short-term pressure on gold because bullion does not pay interest.
Geopolitical tensions keep inflation in focus
Adding to the uncertainty are renewed military tensions in the Middle East.
Fresh US strikes against Iranian military targets pushed oil prices higher, reigniting concerns that energy costs could feed inflation around the world. Rising oil prices increase transport and production costs across the global economy, making the Federal Reserve’s fight against inflation even more challenging.
Despite these headwinds, gold continues to attract investors looking for protection against geopolitical risk and financial market volatility.
The bigger picture still favours gold
While short-term traders reacted to the prospect of higher interest rates, long-term investors are focusing on a much bigger story.
Gold remains one of the strongest-performing major assets of 2026 and is still up around 10% over August, making it one of the best monthly performances of the year.
A major driver has been growing concern about government debt and currency debasement. The US Treasury’s decision to expand bond buybacks has reinforced fears that governments will continue creating liquidity to manage rising borrowing costs.
This “debasement trade” has become one of the dominant themes supporting precious metals, with investors seeking assets that cannot be printed or devalued by central banks.
Goldman Sachs remains firmly bullish
Despite the recent correction, Goldman Sachs has reaffirmed its positive outlook for gold.
The bank expects central banks to remain aggressive buyers of bullion as they diversify reserves away from the US dollar and strengthen their holdings of physical gold. Analysts believe official sector purchases have become a structural, multi-year trend rather than a temporary spike.
Goldman forecasts gold could reach US$4,900 per ounce by the end of 2026, arguing that central bank demand, geopolitical uncertainty and ongoing concerns about sovereign debt will continue to underpin prices.
The bank also expects inflation to gradually ease, reducing the need for additional Federal Reserve rate hikes later in the year.
Is this a buying opportunity?
For FirstGold investors, corrections like this are not unusual during a long-term bull market.
Gold has experienced several sharp pullbacks over the past two years before moving on to establish new record highs. These periods often provide opportunities for investors using a cost averaging strategy, where regular purchases help smooth the impact of short-term price volatility.
Rather than attempting to predict the exact bottom, cost averaging allows investors to accumulate physical bullion consistently over time.
FirstGold View
The market is currently balancing two powerful forces: short-term interest rate fears and long-term monetary uncertainty.
While higher rates may continue to create volatility in the weeks ahead, the underlying drivers that have supported gold throughout 2025 and 2026 remain in place. Central banks continue buying gold, government debt continues to climb, geopolitical risks remain elevated, and investors are increasingly looking to physical precious metals as a store of wealth.
For long-term holders of physical gold, the current pullback looks more like a pause in a powerful trend than the end of the bull market.
Disclaimer: This article is provided for general information only and should not be considered financial advice. Precious metal prices can rise and fall, and past performance is not a guarantee of future results. Investors should consider their own financial circumstances and seek independent professional advice before making investment decisions. FirstGold encourages a long-term approach to accumulating physical bullion through disciplined cost averaging.
