Goldman Sachs Group has stated that central banks worldwide are expected to increase their purchases of gold, which will help lift the price of the precious metal by the end of this year.
Analysts Lina Thomas and Daan Struyven noted in a recent report that gold purchases are projected to rebound to an average of 60 tonnes per month by 2026. According to a revised official gold buying estimation model, the 12-month moving average purchase through March this year was 50 tonnes, up from a previous figure of 29 tonnes. Goldman Sachs commented, "Underlying demand for gold remains robust." Central bank surveys and recent geopolitical developments may further boost demand for gold from both official institutions and private investors in the coming period.
Goldman Sachs's assessment of official sector demand aligns with the optimistic outlook previously provided by the World Gold Council. The council estimates that global central bank gold purchases reached 244 tonnes in the first quarter of this year, higher than the 208 tonnes purchased in the previous quarter.
While Goldman Sachs reiterated its year-end gold price target of $5,400 per ounce in the report, it also cautioned that gold prices could face short-term downward pressure if investors sell liquid assets to raise cash during periods of market stress.
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