Don't worry about the pullback? A major institution loudly proclaims: the allure of gold remains intact!

According to Sadiq Adatia, Chief Investment Officer of BMO Global Asset Management, the performance of gold is more like a growth asset rather than a safe-haven asset, which only strengthens the traditional investment rationale for this precious metal.

"Gold is not performing as usual," Adatia said in an earlier interview. "Typically, it is a hedge against inflation, a hedge against the US dollar, and usually reacts to US bond yields."

He added, "What we have seen in the first half of this year is that gold has performed strongly, the US dollar has also performed strongly, even without risk aversion, it has risen for various reasons, not just the traditional ones. Sovereign wealth funds and countries are buying gold as another store of value."

In fact, in the past six months, gold has actually outperformed the S&P 500 index, with gold rising by 20% while the S&P 500 index rose by 18% during the recent bull market.

Adatia stated that there are many factors driving the rise in gold prices, including continued concerns about a potential recession, central bank gold purchases, and increasing interest from sovereign wealth funds.

"You also see consumers buying more gold, this year the gold bars at US Costco have sold out," he said. "At the same time, people hold gold for normal reasons, because they are worried about economic downturns or consumer weakness. There are many reasons people hold gold, which greatly increases investment opportunities."

Adatia suggested that the outperformance of the so-called "seven giants" over broader indices may be "the most unpopular US stock bull market we have seen."

Nevertheless, he does not expect gold to continue outperforming the S&P 500 index, citing the Chinese central bank's two-month pause in gold purchases and the easing inflation data in the US and Canada.

"I think people should hold gold for the normal reasons they want to own gold, such as hedging market volatility, inflation, and the US dollar. These are the reasons you want to own gold, everything else is icing on the cake," Adatia said.

In late June, BMO Capital Markets' commodity analysts raised their gold price forecast by 5%, expecting the gold price to not fall below $2,000 per ounce in the next four years.

In the short term, the Canadian bank expects the average gold price this year to be around $2,263 per ounce, 4% higher than their previous average expectation of $2,168 per ounce. Looking ahead to 2025, BMO forecasts the average gold price to be around $2,200 per ounce, 5% higher than the bank's previous expectation of $2,100 per ounce.

Although gold is expected to remain range-bound in the third quarter, BMO forecasts that the gold price will remain strong by the end of this year, with an average gold price in the fourth quarter of around $2,350 per ounce. Analysts say that the central bank's gold demand is changing the landscape of precious metal investments, which is also a key factor that gold has largely ignored the higher interest rates brought about by the Federal Reserve's aggressive monetary policy. Analysts point out:

"Perhaps the most important aspect is that incremental gold buyers have shifted from price-sensitive consumers to asset management scale-sensitive asset allocators, and then to central banks driven by mandates. In our view, this shift is a key reason why gold trading prices have consistently been above the cost curve in recent years. We believe that central banks beginning to de-dollarize will be a long-term trend in the next decade."