Managers of gold-related mutual funds see pullbacks by the precious metal, such as the recent 9 percent dip, as a buying opportunity.
After hitting a high of $992.10 an ounce June 3, gold dropped back to $904.80 July 8.
"I don't consider it worrisome at all. In fact, I hope to take advantage of it," Joe Foster, portfolio manager with Van Eck International Investors Gold Fund, tells Barron’s
Indeed, gold already has bounced back from that low. Many investors believe massive fiscal stimulus packages around the globe will spark higher inflation.
And rising inflation brings out gold bugs. Foster maintains that gold will test $1,000 again by year-end and says $1,200 to $1,300 is possible by spring.
Many investors attribute gold’s recent weakness to seasonal factors. Gold prices often slip in the summer without any big gift-giving holidays to spur jewelry purchases, Barron’s notes.
Buying usually rebounds in the fall, thanks to the Indian wedding season, Ramadan, Christmas, and the Chinese New Year.
"For the next month, maybe there will be a little seasonal weakness," Mark Johnson, portfolio manager of USAA Precious Metals and Minerals Fund, tells Barron’s.
"But looking beyond that...the outlook is still positive for gold."
Chinese demand could help boost gold prices too.
“There is a possibility that China might overtake India as the world’s largest gold consumer this year,” Hou Huimin, deputy head of the China Gold Association, told Bloomberg.
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