Gold Digger: Gold is at record highs and many investors are yet to play their hand

• With gold at all time highs, fundamentals remain constructive for higher prices
• State Street APAC gold strategist Robin Tsui says Asian institutions remain underinvested in bullion
• Prices likely to hit US$4000/oz, the question is when

Think gold’s rally has been overdone?

There are real reasons why demand will continue to support high prices, says a strategist connected with sovereign wealth funds, central banks, institutions and family offices across Asia.

State Street’s Hong Kong based APAC gold strategist Robin Tsui recently visited Australia.

He says funds in Asia remain underinvested in gold, generally retaining just 2% of their book in the booming commodity despite the precious metal’s 120% gain over the past three years.

“When we talk to clients in APAC and some of the larger institutional clients … some of the central banks, the sovereign funds in Asia, insurance companies, the consensus is that they actually want to invest more in gold,” Tsui said.

“A lot of clients still under invest in gold. That’s why you’ve seen in the last six to 12 months, the return of ETF inflows has been quite strong, it’s been very strong on the physical side, the futures positioning has been healthy.”

The interest in gold investing from large institutions is driven by familiar themes – dedollarisation, US-China trade tensions, rate cuts – exposure to the US dollar is extreme in many funds.

Gold provides a way to diversify risk for investors in both Asia and North America.

“A lot of investors, especially in the US, they are now pumping more money into gold because they probably see the dollar is going to be weakened,” Tsui said.

“It used to be one rate cut expectation (for 2025), now it’s three, and then of course the change of Fed chairman (in 2026) that’s going create some uncertainty.

“All these factors (are) leading towards quite a bullish case.”

With the fundamental outlook for bullion still supportive, Tsui says most clients remain underinvested.

“We advise 5-10%, but most of them maybe have 2% on average,” Tsui said.

“The general comment that we get is that they want to increase their exposure to gold over the medium term, so I think a lot of investors are thinking about that going forward.”

In-built protection

The general rule of thumb with commodities is that what goes up must go down.

But gold buying remains strong even with customers paying close to US$3700/oz at spot.

It’s still possible prices could rise further.

“We had a base case, when we published our mid-year outlook, we were looking at US$3500/oz and that’s been hit already and our bull case … is US$3900,” Tsui said.

“We’re still predicting that, so I think in the next three months, we believe it will be somewhere between US$3500 and US$3900/oz.

“The US$4000/oz, it’s just a matter of time. It could be next year, because if you look at gold technically, you look the RSI and all that, it’s expensive.

“But at the same time, there’s a lot of fundamentals that are still supporting it.”

Tsui said feedback given to State Street was that if there were a big dip, central banks would enter the market and keep gold at elevated levels. Central banks are looking not just at physical gold, but also gold-backed ETFs, Tsui said.

“The central banks have slowed down. In the first half they bought about 420 tonnes. We do think we’ll be close to about 800 tonnes for 2025,” he said.

“We saw 1000 tonnes in the last three years.

“That could be becoming more challenging as gold price increases. But particularly this year, at least five central banks in Asia reached out to us to understand more about gold and gold-backed ETFs.”

“We always ask the question, what’s the comfortable level that will encourage you guys to get in?” Tsui added.

“Most of them will say around US$3000/oz. If the gold price did dip to US$3000/oz, which is I think is quite difficult (to see) at the moment, there will be an influx of central banks that will accumulate. So that’s why we do feel quite comfortable that gold price.”

A key trigger for gold could come in November, when the latest stay for major tariffs and counter-tariffs proposed by the US and China comes to an end.

Winners and losers

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

Gold medal performers

Who were some of the top precious metals names this week?

Felix Gold (ASX:FXG)

The US gold and antimony explorer saw its shares double in value across the week, running to a 517% YTD gain.

Incredible.

The catalyst was an announcement revealing high grade antimony drilling and stibnite veins near surface from the NW Array prospect at its Treasure Creek project in Alaska.

Antimony is trading around all time highs after prices outside China ran 5x higher last year and held their shape following export controls by the Middle Kingdom. The project also has over 800,000oz of gold, down the road from Kinross’ Fort Knox gold mine, handy with gold prices at record highs.

Felix and MD Joe Webb are talking up the potential of getting into production in Q4 2025 or Q1 2026 at a small scale, pending studies and permits.

Having already had key US Government officials onsite this month, the company is confident of becoming the first new antimony producer in the country in decades, with the Scrafford mine which previously supply the US military between 1915 and 1977 on its ground.

A extra kicker could be a domestic smelter based in the States, with Felix this week revealing it was in discussions with the US Government over a potential development.

For more details read our comprehensive round-up here: America’s military is desperate for antimony, and ASX explorers are in the box seat

Advance Metals (ASX:AVM)

There was nothing by way of news to report for Advance Metals this week, but a surge on Friday prompted a speeding ticket from the ASX.

The junior gold and silver explorer pointed to some marketing done on its behalf by share promoters and research outfits after running from 5.4c on Thursday to as high as 9c.

A bit of sensitivity here given it recently did some diamond drilling at the Happy Valley prospect, part of the Myrtleford project in Victoria.

Results are due next week, with AVM checking in with its geological advisors to make sure nothing has leaked, the company said in its response to the price and volume query.

Maiden drilling at Happy Valley earlier this year delivered a standout hit of 7.5m at 47.9g/t Au, with a peak grade of 446g/t.

Advance is also planning to outline JORC standard resource estimates at three projects in Mexico which carry combined foreign resource numbers of over 100Moz silver equivalent.

At Stockhead, we tell it like it is. While Felix Gold is a Stockhead advertiser, it did not sponsor this article.