"This is a correction within a gold bull market, not the end of it"

EXPERTS are divided on the future of gold, with one saying “gold’s sharp fall is a reminder that hype often comes before a hangover” but another that "this is a correction within a gold bull market, not the end of it.”

This week, the price of gold saw its sharpest fall since 2013, potentially a result of profit-taking and easing US–China tensions, which one financial expert said was a textbook exampleof the risks of being over-exposed to any one asset.

Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, said: “Gold’s sharp fall is a reminder that hype often comes before a hangover. Markets move in cycles and fear of missing out can tempt investors to chase momentum at the wrong time.”

He continued: “The lesson isn’t whether to buy the dip, but how to avoid being gold-hungry and overexposed to any single asset.

"A balanced, diversified approach remains the antidote to both panic and euphoria because lasting wealth is built on patience, not FOMO.”

But Anita Wright, Chartered Financial Planner at Ribble Wealth Management, believes this is a temporary dip for the yellow metal: "This week’s gold price plummet does not look like a bubble bursting. It looks like a shake-out within an ongoing bull market, driven less by hype and more by strain between paper contracts and the supply of real metal.

"Prices have jumped without a big build-up in speculators’ positions, which points to short squeezes and tight physical supply. In that world, sharp pullbacks are normal.

"The big picture is that gold has done this before. Previous bull phases have run much further before topping. On that basis, we are likely only part-way through. If policy makers ease again when risk assets wobble, weaker currencies tend to support gold.

“The forces that took gold to records—high debt, recurring market stress, and a bias to easier money—are still with us. That points to a volatile climb rather than a straight line. In short: this is a correction within a gold bull market, not the end of it.”

Scott Gallacher, Director at Leicester-based Rowley Turton, said gold isn't inherently safer than the stock market: "While gold has fallen back a little, it’s still up over 50% in GBP terms over the past 12 months. Consequently, I’m not convinced this pullback represents a particularly strong buying opportunity.

“Rather, it’s a reminder that gold is not immune to declines. Investors should remember that gold isn’t inherently safer than the stock market, it just dances to a different tune.”