In a complex global environment marked by ongoing geopolitical shifts and persistent inflationary pressures, Goldman Sachs has significantly raised its forecast for global central bank gold purchases and reaffirmed its year-end bullish price target of $5,400 per ounce for gold. This outlook aligns with a series of optimistic signals recently released by several international investment banks, providing a significant boost to the gold market, which has experienced months of volatility.
Analysts Lina Thomas and Daan Struyven at Goldman Sachs stated in a report dated May 15 that they expect global central bank gold purchases to increase to an average of 60 tonnes per month by 2026. Notably, this new forecast is underpinned by a substantial methodological revision.
Based on the revised cumulative estimation framework, the 12-month moving average for central bank gold purchases in March has been significantly adjusted upward to 50 tonnes from a previous estimate of 29 tonnes. Goldman Sachs explained that the prior estimation method partially relied on fund flow assumptions from UK trade data, which may no longer fully reflect market changes, prompting the update. This suggests that a portion of central bank gold-buying activity, previously underreported or missed, is now coming into clearer market focus.
Furthermore, the analysts cited an internal survey indicating that central banks have a strong fundamental demand for gold, and recent geopolitical developments could further reinforce diversification motives over time. While details of the survey were not disclosed, this statement suggests that, within the current international political and economic landscape, the strategic role of gold in official reserves is being reassessed.
This assessment of official sector activity follows an optimistic report from the World Gold Council. The Council's Q1 2026 Global Gold Demand Trends Report, released on April 29, showed that global central banks were net purchasers of 244 tonnes of gold in the first quarter, a 3% year-on-year increase, surpassing the previous quarter's level and the five-year average. Despite increased sales from a few official institutions like Turkey, Russia, and Azerbaijan's State Oil Fund, global central bank buying momentum remained robust.
Total global gold demand (including over-the-counter transactions) reached 1,231 tonnes in Q1, up 2% year-on-year. The total value of demand surged to a record $193 billion, a 74% increase. Among reported data, Poland, Uzbekistan, and China were the largest purchasers, while purchases by some other central banks were not disclosed. The World Gold Council forecasts that full-year 2026 central bank purchases will remain in the range of 700 to 900 tonnes.
Regarding China, the People's Bank of China has increased its gold reserves for 18 consecutive months. By the end of April 2026, China's gold reserves reached 74.64 million ounces, with a net addition of 260,000 ounces in April alone, representing an acceleration in the pace of accumulation. Anliang Futures analysis suggests three key drivers behind the accelerated purchases by the PBOC: the ongoing evolution of geopolitical risks, a phase of price correction providing a favorable buying window, and the role of increased gold reserves in supporting the internationalization of the renminbi.
Analysts widely agree that the core logic for central bank gold buying is reserve diversification and de-dollarization motives. CITIC Securities notes that the structural trend of global central bank gold purchases remains resilient, with emerging market central banks' gold reserve ratios still significantly lower than those of developed nations, indicating this buying cycle is far from over. UBS estimates 2026 official sector purchases at approximately 800 to 850 tonnes, slightly below the 863 tonnes in 2025 but still at historically high levels in absolute terms.
Since the outbreak of conflict in the Middle East, gold's performance has been volatile, with its traditional safe-haven logic facing significant challenges in this round of geopolitical tensions. After hitting a record high of $5,626.80 per ounce on January 29, spot gold experienced a substantial correction of approximately $800. As of Monday, May 18, spot gold was trading near $4,534 per ounce, well below its January peak.
Why did the traditional logic of gold rising on conflict not hold in this instance? The answer lies in the emergence of market priorities higher than safe-haven demand: inflation and interest rates.
Since the US-Iran conflict escalated in late February, international oil prices have continued to climb, with disruptions in the Strait of Hormuz causing ongoing pressure on global energy supply. The US Consumer Price Index (CPI) rose 3.8% year-on-year in April, hitting a near three-year high, signaling a clear reacceleration of inflation. US-Iran diplomatic talks have reached an impasse over key disagreements, suggesting oil prices may remain elevated in the near term, potentially worsening the inflation outlook in the coming months.
Expectations of rebounding inflation have directly reversed the market's earlier optimistic outlook for sustained Federal Reserve rate cuts. On March 19, the Fed announced it would maintain the federal funds rate target range between 3.5% and 3.75%. Previously, markets widely anticipated the Fed would initiate a sustained cutting cycle in 2026, which was a core driver of gold's earlier rally. However, the timing of potential cuts has been repeatedly pushed back, the expected magnitude of cuts has been revised down, US real rates have risen, and market pricing has even begun to incorporate expectations of rate hikes. According to CME FedWatch data, the probability of a Fed rate hike within the year has risen to approximately 40%. Rising rate hike expectations exert direct pressure on gold—as a non-yielding asset, its relative attractiveness diminishes in a rising interest rate environment.
Particularly noteworthy is the official appointment of Kevin Warsh as Federal Reserve Chairman on May 15. He faces a stagflation-like scenario—slowing growth alongside rising inflation—and the most severe internal dissent within the FOMC in 34 years: four of the 12 voting members dissented from the policy statement. This implies heightened uncertainty regarding the future path of monetary policy.
Simultaneously, the flow of safe-haven funds has undergone a structural shift. Funds have not flooded into gold on a large scale but have instead favored more liquid and yield-bearing US dollar assets. The sell-off in global bond markets has also placed additional pressure on non-yielding gold. On May 15, following the deadlock in US-Iran talks, the international gold market experienced another significant correction, with prices quickly falling below the $4,600 per ounce level.
While the long-term bullish thesis is clear, Goldman Sachs remains cautious on the short-term outlook. The report specifically notes that gold can serve as a natural source of liquidity for private investors—for instance, if equities sell off amid rising rates and weakening growth expectations.
This warning is noteworthy. Since May, volatility in the gold market has exceeded that of US equities, reflecting highly divergent investor sentiment. The World Gold Council also cautions that while central bank demand remains structurally firm, recent market volatility reminds investors that gold, under extreme stress, could also face selling pressure to meet liquidity needs.
It is worth noting that Goldman Sachs is not the only institution bullish on gold in the long term. Recently, several top international investment banks have issued optimistic forecasts for gold, creating a strong chorus of bullish sentiment.
UBS maintains a year-end 2026 gold price target of $5,600 per ounce, while also forecasting silver to reach $100 per ounce. Affected by mark-to-market adjustments in Q1, UBS has slightly revised its 2026 average annual gold price forecast from $5,200 to $5,000 but firmly maintains its $5,600 year-end target.
ANZ expects gold prices to rise to between $5,800 and $6,000 per ounce by year-end, arguing that gold's safe-haven and store-of-value attributes will become more prominent as an energy crisis constrains economic growth. Meanwhile, J.P. Morgan, Wells Fargo, and Bank of America all forecast gold reaching between $6,000 and $6,300 per ounce by the end of the year.
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