Goldman Sachs maintains its positive outlook on gold, asserting that the precious metal's rally this year is not over, despite prices having declined for four consecutive months. A team led by the bank's Co-Head of Global Commodities Research forecasts that sustained gold purchasing demand from emerging market central banks could propel prices back to $4,900 per ounce by the end of 2026.
The bank highlights that the trend of reserve diversification among emerging market central banks, which gained momentum following the freezing of Russia's foreign exchange reserves in 2022, remains a fundamental structural support and the cornerstone of its price target for late 2026. This trend is corroborated by the latest survey from the World Gold Council, which found that a record 45% of the 76 central banks surveyed between February and May plan to increase their gold holdings over the next 12 months.
In the near term, however, gold faces headwinds. Market expectations that the Federal Reserve may raise interest rates this year due to inflation concerns are likely to dampen demand from rate-sensitive ETFs. Additionally, the gold price has fallen approximately 24% since the outbreak of the Iran conflict in late February. Consequently, Goldman Sachs recently revised its year-end 2026 gold price target down by $500, from $5,400 to $4,900 per ounce, adopting a tactically cautious stance for the immediate future.
Over the medium to long term, Goldman Sachs sees the risks to its gold price forecasts as skewed to the upside. The bank anticipates a gradual increase in gold ETF holdings once the Federal Reserve holds rates steady and begins an easing cycle in the second half of next year. Furthermore, concerns over fiscal sustainability in Western nations could also drive private investors to allocate more capital into gold.
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