(Kitco News) - Gold prices may be struggling as investors focus on rising inflation and the prospect of higher interest rates, but one precious metals analyst says the market is missing the bigger picture — and that could make the current selloff one of the most compelling buying opportunities in years.
In an interview with Kitco News, Matthew Jones, Co-Founder and Precious Metals Analyst at Britannia Bullion, said gold is increasingly distinguishing itself as money rather than simply another financial asset, particularly as governments continue to expand debt and erode the purchasing power of fiat currencies.
However, Jones said investors appear overly focused on the first-order consequences of rising geopolitical tensions and higher energy prices while ignoring what could come next.
“The way that I'm reading it ... I think the markets are forgetting the next chapter,” he said.
Jones said the current market narrative is relatively straightforward: a conflict in a major oil-producing region threatens energy supplies and transportation, pushing oil prices higher, which in turn raises inflation and forces central banks to maintain higher interest rates.
“Those dots are quite easy to join up. But I think they're saying that's the end of the story,” he said. “And I think for people that are holding gold on a longer term, this is just the beginning.”
Jones said that if geopolitical tensions and disruptions to global energy markets persist for another six to 12 months, higher energy costs could begin to have much broader economic consequences. Rising transportation, manufacturing and distribution costs could ultimately push major economies toward recession.
“And then I think those holding gold look very clever indeed,” he said.
Gold has struggled as rising oil prices have revived inflation fears and shifted investor attention back toward the possibility that global central banks will have to keep interest rates elevated. Higher real interest rates traditionally increase gold's opportunity costs because the precious metal does not offer a yield.
However, Jones said this focus overlooks the uncertainty created by what comes after another inflationary shock, particularly if central banks are forced to choose between supporting weakening economies and maintaining restrictive monetary policy.
His comments come as gold has seen renewed volatility as the market gives back some important gains after prices rallied 15% in August. After a months-long correction, gold prices managed to rally 10% last month. Spot gold last traded at $4,386.40 an ounce, up 1% on the day.
Despite last month’s recovery, Jones noted that gold is trading substantially below its record highs at a time when geopolitical tensions remain elevated, inflation is accelerating again, central banks continue to accumulate the precious metal, and China appears increasingly interested in expanding gold's role within the global financial system.
“To buy gold now at this price, it looks like the bargain of the century,” he said.
Gold is becoming attractive money against currencies
Jones said gold's appeal goes beyond its traditional role as a safe-haven asset. He argued that investors increasingly need to distinguish between gold as money and the fiat currencies that governments can create in virtually unlimited quantities.
“If you've been holding fiat and you've continually watched fiat do this, as you work harder and harder, well, I can see the attraction of having a currency which has something that sits behind it which gives value to your work, your labor, your intellectual property, your product,” he said.
Jones added that consumers are increasingly preferring to hold “money and not currency,” particularly when governments face powerful political incentives to avoid either raising taxes or cutting spending.
“If currency can be created at will, and if governments don't want to increase taxes for fear of losing votes, they don't want to cut public spending for fear of losing votes, they just create currency,” he said. “And I think the creation of currency, that debases our currency.”
This new monetary argument is also reflected in continued central-bank demand, he added.
In his latest market report, Jones pointed out central banks bought a net 289 tonnes of gold during the second quarter of 2026, a 62% increase from the same period last year. Meanwhile, 89% of central banks surveyed by the World Gold Council expect global official gold reserves to rise during the next 12 months, while a record 45% expect to increase their own holdings.
Jones said China's activity is particularly significant. He argued that the country's investment in gold infrastructure — including vaults, refineries, pricing and trading — suggests policymakers see a potentially larger monetary role for the precious metal.
“I think they're voting that, yes, moving forward we see gold playing a more pivotal or central role in the global economy,” he said.
The broader argument is that gold sits outside the traditional sovereign monetary system. Unlike government debt or fiat currency, it does not depend on a government's ability or willingness to honor a financial obligation. Governments can expand the supply of currency and debt, but they cannot manufacture gold in the same manner.
Jones said even an eventual easing of geopolitical tensions would not eliminate gold's underlying investment case.
A return to the ‘normal’ situation means government debt would remain elevated, inflationary pressures would persist, and central banks would continue diversifying their reserves.
“Normal is still pretty much every government addicted to expanding their debt,” he said. “Normal is still persistent inflation. Normal, certainly over the last five years, has still been pretty aggressive buying from central banks, most notably China. So even in normal, I think gold still plays a very strong role as a defensive play in your portfolio.”
Jones said uncertainty itself could eventually become more important to investors than gold's opportunity costs.
As equity markets become more volatile and investors begin experiencing larger portfolio losses, he expects demand for defensive assets to increase.
“I think gold is a defensive play,” he said. “I think looking forward it's almost impossible to speculate to accumulate, so you do the opposite, you consolidate and protect. And I think gold's a very smart way to consolidate.”
Jones also expects gold to eventually revisit its previous highs. He said he would be “very, very surprised” if prices were not back near their earlier records by the fourth quarter of this year or the first quarter of 2027. Beyond that, he said continued geopolitical instability, persistent inflation and growing debt could generate significantly higher prices over the next five years.
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