(Kitco News) - Gold investors shouldn't mistake the precious metal's sharp correction for the start of a new bear market, according to one portfolio manager, who argues that the long-term fundamentals remain intact and the recent weakness has created an attractive buying opportunity across both bullion and mining equities.
In an interview with Kitco News, Nawojka Wachowiak, Senior Portfolio Manager at Ninepoint Partners, said investors need to resist getting caught up in short-term market swings and instead focus on the structural forces that continue to support gold.
"I see this as a pause in what remains a broader bull market for gold," she said. "The only problem is I just don't know how long this pause will last."
Wachowiak's views have been highlighted in Ninepoint's mid-year outlook, published last month, which describes gold’s decline as a "healthy correction" that has flushed speculative positions from the market while creating a stronger foundation for the next leg higher. The firm said the pullback has established a new trading floor while leaving the long-term fundamentals supporting gold firmly intact.
Gold has struggled in recent months as expectations for higher U.S. interest rates, a stronger U.S. dollar and uncertainty surrounding new Federal Reserve Chair Kevin Warsh have weighed on investor sentiment. However, Wachowiak said those headwinds have overshadowed the much bigger picture.
"At the beginning of 2026, central bank demand was strong, geopolitical risk was elevated, concerns over U.S. debt was growing, the U.S. dollar was weakening and expectations for rate cuts were building,” she said. “All the boxes for gold’s rally were checked.”
While some of those factors have temporarily taken a back seat as markets focus almost exclusively on Federal Reserve policy, Wachowiak stressed that the underlying bullish drivers have not disappeared.
"It's all about the Fed and the U.S. dollar right now," she said. "But those longer term drivers still remain in place, and it’s important to step back and recognize that there's a lot more going on here than just the next incremental economic data point."
She pointed specifically to continued central bank demand as one of the market's most important sources of support. She explained that there is a growing recognition of gold’s role as a foundational reserve asset.
Wachowiak also explained that persistent geopolitical uncertainty and growing concerns over government debt as long-term catalysts that have not changed simply because investors have become fixated on interest-rate expectations.
According to Wachowiak, the resilience of physical demand became evident when gold briefly fell below $4,000 an ounce before quickly recovering.
"I thought it was really interesting, and very critical, that gold has held this $4,000 level," she said. "It held because there's a significant buyer in this physical market. When we see these corrections, that buyer is stepping in."
She added that central banks remain on pace to buy roughly 1,000 tonnes of gold this year—equivalent to roughly 15% to 20% of annual mine production—creating a powerful floor beneath the market.
"If you have a buyer of that magnitude that steps in on pullbacks, you are going to find a floor."
Don't let the noise distract you
Although Wachowiak acknowledged that the current environment has been unusually volatile, she said investors need to avoid making emotional decisions based on daily headlines.
"In this kind of environment, you have to constantly step back, look at the big picture and try not to react to every headline," she said"
Instead, she said Ninepoint continues to focus on identifying quality companies and preparing for the next leg higher.
"We're looking for quality investments," she said. "This creates opportunities for us."
She added that the firm's investment process hasn't changed despite the correction.
"We keep doing the site visits, keep doing what we're doing, because we believe we're going to come out the other end of this."
Most importantly, she said investors shouldn't allow short-term uncertainty to derail their long-term investment thesis.
"You try not to let the noise take you away from that because, in the end, I'm still super excited and positive about the outlook for this sector,” she said. “As we come out of this pause, when it goes, it'll go fast, and we want to be ready."
Gold miners remain exceptionally healthy
While gold's correction has weighed heavily on mining shares, Wachowiak argued that equity valuations have become disconnected from company fundamentals.
"We're still printing money at $4,000," she said.
"We have no debt. We still have plenty to continue those buybacks. So from a health perspective, this is a very, very healthy market, and it's a very healthy gold industry."
Those comments are reinforced by Ninepoint's latest outlook, which says gold producers are operating in the strongest financial environment in the industry's history. Although rising energy prices could add between $70 and $95 an ounce to operating costs—and potentially lift industry costs by as much as 20% over the next year if oil prices remain elevated—the firm said the current gold price more than offsets those headwinds.
According to Ninepoint, producers are currently generating roughly $3,000 an ounce in all-in sustaining cost margins, producing substantial free cash flow that continues to be returned to shareholders through dividends and share buybacks.
Wachowiak noted that many producers entered the recent spike in energy prices with fuel hedges and inventories purchased at lower prices, limiting the immediate impact of higher oil costs. Meanwhile, lower energy prices should provide an additional tailwind heading into the second half of the year.
She added that although margins have narrowed from their peak earlier this year, profitability remains stronger than last year's exceptionally strong levels.
"The market has taken these stocks down so rapidly and so significantly that I think that has already been priced in."
Ninepoint argues that the disconnect between fundamentals and valuations has created one of the most compelling entry points in years.
In its report, the firm said many gold equities continue to trade below historical valuation averages even as profit growth is expected to continue outpacing cost inflation. It added that the current pullback should be viewed as a buying opportunity within a multi-year bull market rather than the beginning of a prolonged downturn.
At current prices, Wachowiak estimates many producers are trading at roughly eight times EV/EBITDA, falling to around six times earnings if gold eventually returns to $5,000 an ounce.
"We're at bargain-basement valuations," she said. "It just tells you that the money hasn't really flowed in yet."
The bull market remains intact
Looking ahead, Wachowiak said the industry's challenge is no longer simply generating higher gold prices but demonstrating that today's profitability is sustainable.
She praised producers for maintaining disciplined balance sheets, returning capital to shareholders through dividends and buybacks, and pursuing acquisitions that enhance value rather than simply adding production.
She also said mining companies appear determined to preserve margins by maintaining conservative mine plans and investing in exploration rather than sacrificing profitability through adding lower-grade production.
"The market is watching what they're doing," she said. "The industry is looking to capture that margin expansion."
