Investors should pay attention to the latest uptick in central banks' gold purchases, as these institutions have historically bought gold on the dips, said Jeffrey Christian, managing partner of CPM Group.
"Central banks are more price sensitive than private investors, so they'll buy on the dips whereas a lot of private investors only buy when the price is rising," Christian told Kitco News on the sidelines of the Silver & Gold Summit in San Francisco.
Additionally, gold purchases signal that central banks are ready to hedge their U.S. dollar exposure, Christian said.
"What we've been seeing over the last year or two, and what we've been writing about over the last year or two, is the fact that central banks other than Kazakhstan, Russia, and China are showing renewed interest in gold," he said.
With the dollar being overvalued, central banks are turning to other safe haven currencies, without resorting to the euro, according to Christian.