According to Goldman Sachs, central banks are expected to increase their gold purchases, which could help lift gold prices by the end of the year. Analysts Lina Thomas and Daan Struyven stated in a report dated May 15 that gold purchases are projected to recover to an average of 60 tons per month by 2026. Based on a revised official gold purchase estimation model, the 12-month moving average purchase as of March this year was 50 tons, up from the previous 29 tons. The analysts cited an internal survey indicating that central banks have a "strong fundamental demand" for gold. Recent geopolitical developments may further strengthen the trend of diversifying reserves. Since the outbreak of the Middle East conflict, gold prices have faced pressure. Rising energy costs have increased global inflationary pressures, making central banks more reluctant to ease monetary policies. With no signs of the conflict ending, the sell-off in global bond markets has further suppressed the price of non-yielding gold. Goldman Sachs's assessment of official sector demand aligns with the optimistic outlook previously expressed by the World Gold Council. The organization estimates that global central banks purchased 244 tons of gold in the first quarter of this year, up from 208 tons in the previous quarter. On Monday, spot gold traded near $4,534 per ounce, having retreated from the near $5,600 per ounce record high reached at the end of January. Goldman Sachs maintains a bullish stance, forecasting that gold prices could rise to $5,400 per ounce by the end of the year. UBS Group and ANZ have previously expressed similarly optimistic views.
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