A hedge fund with a 235% return viewed the drop in gold prices as temporary

The recent decline in gold prices—which have fallen more than 20% from their all-time high in January—is temporary, and the key drivers of the precious metal’s long-term appreciation remain intact, according to Raphael Lamm, co-manager of the Australian L1 Gold Fund, which has $1.5 billion in assets under management (AUD 1.5 billion; $1.1 billion). This specialized hedge fund profits from both rising and falling gold-related assets. Since its launch last year, it has delivered a net return of more than 200% to investors, according to Bloomberg.

"Fiscal instability in key markets," particularly U.S. national debt, which exceeds $40 trillion, as well as central banks’ growing investments in the precious metal, will support gold in the medium and long term, Lamm believes. In the short term, however, price movements will be driven by developments in the conflict between the U.S. and Iran, interest rates, and inflation data, according to Bloomberg.

Gold has been under pressure since January, when its price reached an all-time high above $5,600 per ounce. This non-interest-bearing asset is being weighed down by surging energy prices and expectations of a Fed rate hike. “Although there has been some negative pressure on the gold market since the start of the war with Iran, we believe it is purely temporary,” Lamm noted. “Most of the key factors driving demand for gold will persist or even strengthen in the medium term.”

During Friday's trading session, the spot price of gold rose by nearly 1%—to $4,315.76 per ounce—though the precious metal is still likely to end the week down by more than 1%.

The L1 Gold Fund is part of the Australian investment firm L1 Group. The fund combines long positions in the stocks of gold-related companies with a short position in gold futures for hedging purposes. According to a representative of the L1 Gold Fund, the fund’s net return from its launch in February of last year through the end of August was 235%. By comparison, the VanEck Gold Miners sector ETF rose by approximately 148%, while physical gold prices rose by 55% over the same period, according to Bloomberg.

The fund’s largest holding is Canada’s Eldorado Gold Corp. (whose shares are also traded in New York—where they have risen by more than 16% since the start of the year). The fund is also the largest shareholder of K92 Mining, the operator of the Kainantu gold mine in Papua New Guinea, the agency notes. In Toronto, the company’s shares have risen 28% since January 2026.

This article was AI-translated and verified by a human editor